1
Exhibit 10.2
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STOCK PURCHASE AGREEMENT
among
SH HOLDINGS CORP.,
THE OTHER PERSONS IDENTIFIED
ON SCHEDULE 1 HERETO,
▇▇▇▇▇▇ CAPITAL CORPORATION
and
STEEL HEDDLE GROUP, INC.
Dated as of May 1, 1998
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TABLE OF CONTENTS
Page
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Certain Matters of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. ACQUISITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3. PAYMENT AND CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2. Closing Statement and Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.3. Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.4. Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1. Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2. Authorization and Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3. Non-Contravention, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4. Title to Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5. Brokers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1. Corporate Matters, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2. Financial Statements, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3. Change in Condition Since Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4. Environmental Matters, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5. Real and Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.6. Intellectual Property Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.7. Certain Contractual Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.8. Insurance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.9. Litigation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.10. Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.11. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.12. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.13. Brokers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.14. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.15. Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.1. Corporate Matters, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.2. Financial Condition, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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6.3. Investment Intent, Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.4. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.5. Brokers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7. CERTAIN AGREEMENTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.1. Payment of Transfer Taxes and Other Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2. Confidentiality Covenant of the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.3. Operation of Business and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.4. Preparation for Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.5. Potential Parachute Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.6. Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.7. No Section 338 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.8. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.9. Delivery of Interim Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.10. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.11. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.12. Covenant Not to Compete; Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.13. Litigation Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.14. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.15. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.16. Accountant's Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.17. Discharge of Management Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.18. Exercise of Options, Rights and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1. Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2. Legality; Governmental Authorization; Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3. Third-Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.4. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.5. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.6. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.7. Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.8. Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.1. Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.2. Legality; Government Authorization; Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.3. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.4. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10. EMPLOYMENT AND EMPLOYEE BENEFITS ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1. Employment of Affected Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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10.2. Continuation of Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.3. WARN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.4. Third-Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.2. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.3. Monetary Limitations on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.4. Third-Party Claims, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.5. Mineral Spirits Remediation at Westminster, S.C. Facility . . . . . . . . . . . . . . . . . . . . . . . . 42
11.6. Special ▇▇▇▇▇ Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.7. Certain Other Indemnity Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12. CONSENT TO JURISDICTION; JURY TRIAL WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.2. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.1. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
13.3. Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
14.1. Entire Agreement; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
14.2. Amendment or Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.3. Investigation; No Additional Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.4. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.6. Limited Liability of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.7. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.9. Headings, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.10. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.11. Termination of Stockholder's Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.12. Termination of Consulting Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.14. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.15. Strict Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.16. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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EXHIBITS
Exhibit 3.2.1 Working Capital
Exhibit 8.4 Opinion of Sellers' and Company Counsel
Exhibit 9.4 Opinion of Buyer's Counsel
Exhibit 11.5.2 Environmental Escrow Agreement
SCHEDULES
Schedule 1 Ownership; Stock Subject to Liens
Schedule 4.3 Sellers' Exceptions to Non-Contravention
Schedule 5.1.2 Company Exceptions to Non-Contravention
Schedule 5.1.4 SH Holdings Corp. Subsidiaries
Schedule 5.1.5 Directors & Officers
Schedule 5.3 Changes in Condition Since Balance Sheet Date
Schedule 5.4 Environmental Matters
Schedule 5.5.1 Liens on Personal Property
Schedule 5.5.2 Owned Real Property
Schedule 5.5.2(a) Liens on Owned Real Property
Schedule 5.5.2(b) Leased Real Property
Schedule 5.6 List of Trademarks, Patents and Licenses
Schedule 5.7 Contractual Obligations
Schedule 5.8 Insurance Policies
Schedule 5.9 Litigation
Schedule 5.10 Compliance with Laws
Schedule 5.11 Tax Matters
Schedule 5.12 Employee Benefit Plans
Schedule 5.14 Absence of Undisclosed Liabilities
Schedule 5.15 Labor
Schedule 7.3 Operation of Business Pre-Closing
Schedule 7.12 Key Management Employees
Schedule 8.3 Third-Party Consents
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the
first day of May, 1998, among SH Holdings Corp., a Pennsylvania corporation
(the "Company"), each stockholder or holder of options, warrants or rights of
the Company listed on Schedule 1 hereto which has executed a counterpart hereof
(each singularly, a "Seller" and, collectively, the "Sellers" of the Company),
▇▇▇▇▇▇ Capital Corporation, a Delaware corporation ("▇▇▇▇▇▇") (with respect to
Section 7.12 hereof only) and Steel Heddle Group, Inc., a Delaware corporation
(the "Buyer").
Recitals
1. Each of the Sellers owns (a) the shares of Class A Common Stock of
the Company, par value $.01 per share set forth opposite such Seller's name on
Schedule 1 hereto (the "Class A Common Stock") ; (b) the shares of Class B
Common Stock of the Company, par value $.01 per share set forth opposite such
Seller's name on Schedule 1 hereto (the "Class B Common Stock"); (c) the
options to purchase shares of Class A Common Stock set forth opposite such
Seller's name on Schedule 1 hereto (the "Options"); (d) the warrants to
purchase shares of Class A Common Stock set forth opposite such Seller's name
on Schedule 1 hereto (the "Warrants"); and (e) the rights to purchase Class A
Common Stock set forth opposite such Seller's name on Schedule 1 hereto (the
"Rights"). The shares of Class A Common Stock and Class B Common Stock,
together with any shares of Class A Common Stock issued upon exercise of the
Options, Warrants and Rights prior to Closing, are referred to collectively as
the "Shares," and the Shares, Options, Warrants and Rights are collectively
referred to as the "Securities."
2. The Buyer wishes to afford certain key employees of the Company
who own Shares, Options or Rights the opportunity to exchange such Securities
for Rollover Securities (as defined herein).
3. The Sellers desire to (i) sell and transfer their Shares to Buyer
for cash (other than any Shares designated by such Seller, subject to Buyer's
approval, as Excluded Securities (as defined below) which would be exchanged
for Rollover Securities (as defined below)) and (ii) have their Options,
Warrants and Rights canceled in exchange for the payment in cash of their net
value (other than any Options or Rights designated by such Seller, subject to
Buyer's approval, as Excluded Securities which would be canceled in exchange
for Rollover Securities).
Agreement
Therefore, in consideration of the foregoing and the mutual agreements
and covenants set forth below, the parties hereto hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
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1.1. Certain Matters of Construction. In addition to the
definitions referred to or set forth below in this Section 1:
(a) The words "hereof," "herein," "hereunder" and words
of similar import refer to this Agreement as a whole and not to any
particular Section or provision of this Agreement, and reference to a
particular Section of this Agreement includes all subsections thereof.
(b) The words "party" and "parties" refer to the Sellers,
the Company and the Buyer.
(c) Definitions are equally applicable to both the
singular and plural forms of the terms defined, and references to the
masculine, feminine or neuter gender include each other gender.
(d) Accounting terms used herein and not otherwise
defined herein are used herein as defined by Generally Accepted
Accounting Principles (as defined below) in effect as of the date
hereof, consistently applied.
(e) All references in this Agreement to any Exhibit or
Schedule, unless the context otherwise requires, refer to an Exhibit
or Schedule, as the case may be, to this Agreement, all of which are
made a part of this Agreement.
(f) The word "including" means including without
limitation.
1.2. Certain Definitions. The following terms shall have the
following meanings:
1.2.1. "Action" means any judicial or administrative
action, suit or proceeding before any Governmental Authority.
1.2.2. "Active Remediation Phase" is defined in Section
11.5.3.
1.2.3. "Affected Employees" means all current employees of
any of the Steel Heddle Companies as of the Closing Date, including
any such person who is on an approved leave of absence.
1.2.4. "Affiliate" means, as to the Company (or other
specified Person), each Person directly or indirectly controlling,
controlled by or under common control with the Company (or such
specified Person). For purposes of this definition, the term
"control" (including the terms "controlling," "controlled by" and
"under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities
or otherwise.
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1.2.5. "Agreement" is defined in the Preamble.
1.2.6. "Another Transaction" is defined in Section 7.10.
1.2.7. "Balance Sheet" is defined in Section 5.2.1.
1.2.8. "Balance Sheet Date" means January 3, 1998.
1.2.9. "Bank Debt" means all Debt (including all
outstanding principal, prepayment premiums, if any, and accrued
interest, fees, penalties and expenses related thereto, but excluding
the DHEC Letter of Credit) of the Steel Heddle Companies to
NationsBank, N.A. under the Credit Agreement dated as of February 21,
1997 between the Company and NationsBank, N.A.
1.2.10. "BCC Sellers" means, collectively, Mezzanine
Lending Associates II, L.P., a Delaware limited partnership; Mezzanine
Lending Associates III, L.P., a Delaware limited partnership;
Mezzanine Lending Management II, L.P., a Delaware limited partnership;
Mezzanine Lending Management III, L.P.; a Delaware limited
partnership; Senior Lending Associates I, L.P. a Delaware limited
partnership; Senior Lending Associates II, L.P., a Delaware limited
partnership; Senior Lending Management I, L.P., a Delaware limited
partnership; and BCC Industrial Services, Inc., a Delaware
corporation.
1.2.11. "Bonus Liability" means the aggregate amounts
payable pursuant to the Bonus Agreements dated as of April 21, 1998
among the Company, Mfg. Co. and each of ▇▇▇▇▇▇▇▇ ▇. Team, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as a result of the transactions
contemplated by this Agreement.
1.2.12. "Business" means the business of the Steel Heddle
Companies as such business is currently conducted.
1.2.13. "Business Day" means any day on which banking
institutions in New York, New York are customarily open for the
purpose of transacting business.
1.2.14. "▇▇▇▇▇▇" is defined in the Preamble.
1.2.15. "Buyer" is defined in the Preamble.
1.2.16. "By-laws" means the corporate by-laws of a
corporation, as from time to time in effect.
1.2.17. "Cash Consideration" is defined in Section 3.1.3.
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1.2.18. "Charter" means the certificate or articles of
incorporation or organization or other charter or organizational
documents of any Person (other than an individual), each as from time
to time in effect.
1.2.19. "Class A Common Stock" is defined in the Recitals.
1.2.20. "Class B Common Stock" is defined in the Recitals.
1.2.21. "Closing" is defined in Section 2.
1.2.22. "Closing Balance Sheet" is defined in Section
3.2.1.
1.2.23. "Closing Date" is defined in Section 2.
1.2.24. "Closing Working Capital" is defined in Section
3.2.1.
1.2.25. "COBRA" is defined in Section 5.12.
1.2.26. "Code" means the federal Internal Revenue Code of
1986, as amended.
1.2.27. "Commitment Letters" is defined in Section 6.2.
1.2.28. "Company" is defined in the Preamble.
1.2.29. "Company Plans" is defined in Section 5.12.
1.2.30. "Compensation Tax Benefit" means an amount equal to
the product of (a) 18.65%, multiplied by (b) the sum of (i) the Bonus
Liability, plus (ii) the aggregate amount of the Cash Consideration
before any adjustment to the Purchase Price pursuant to Section 3.2)
actually paid in connection with the cancellation of Options, Warrants
and Rights , plus (iii) the portion of the Escrow Amount attributable
to such Options, Warrants and Rights (determined based on
Proportionate Shares); provided, however, that each Potential
Parachute Payment (as defined in Section 7.5 below) for which a waiver
or stockholder approval is not obtained prior to the Closing in
accordance with Section 7.5 shall be ignored for purposes of this
clause (b). The amount of the Compensation Tax Benefit shall not be
affected by any disallowance of any deduction claimed in respect of
amounts included within the calculation.
1.2.31. "Confidential Information" means, as to any Person,
any proprietary or confidential information concerning any of the
Steel Heddle Companies or this Agreement, excluding information (a)
that is generally known at the Closing Date in the trade or business
in which the Steel Heddle Companies are now engaged or becomes so
generally known after the Closing Date, through no act of such Person
or his, her or its Affiliates; (b) has come into the possession of
such Person or his, her or its Affiliates
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from a third party who is under no obligation to maintain the
confidentiality of such information; (c) was developed by such Person
or his, her of its Affiliates, independently of and without reference
to the Confidential Information; or (d) is disclosed by Buyer or its
Affiliates to third parties without restrictions on disclosure and
use.
1.2.32. "Confidentiality Agreement" is defined in Section
7.2.
1.2.33. "Contracts" is defined in Section 5.7.
1.2.34. "Contractual Obligation" means, with respect to any
Person, any oral or written contract, agreement, deed, mortgage,
lease, license, indenture, note, bond, or other document or instrument
to which or by which such Person is legally bound.
1.2.35. "Debt" means all obligations (other than
obligations owed to any Steel Heddle Company) of the Company or its
Subsidiaries (i) for borrowed money (including accrued interest, fees,
penalties and premiums or payments in addition to principal); (ii)
evidenced by notes, bonds, debentures or similar instruments, but in
no event including operating leases; (iii) in respect of capitalized
leases and purchase money obligations, but in no event including trade
payables incurred in the Ordinary Course of Business and payable in
accordance with customary practices; (iv) in respect of banker's
acceptances issued or created for the account of the Company or its
Subsidiaries or letters of credit; (v) for indebtedness or obligations
of the types referred to in the preceding clauses (i) through (iv) of
any other Person secured by any Lien on any assets of the Company or
its Subsidiaries to the extent attributable to the interest of the
Company or any of its Subsidiaries in such assets, even though neither
the Company nor any of its Subsidiaries has assumed or otherwise
become liable for the payment thereof, but excluding customer deposits
and interest payable thereon in the Ordinary Course of Business; and
(vi) in the nature of guarantees of obligations of the type described
in clauses (i) through (v) above of any other Person.
1.2.36. "Debt Payment" is defined in Section 3.1.3.
1.2.37. "Definitive Financing Agreements" is defined in
Section 7.4.4.
1.2.38. "Early Termination" is defined in Section 11.5.6.
1.2.39. "Enforceable" means, with respect to any
Contractual Obligation, that such Contractual Obligation is the legal,
valid and binding obligation of the Person in question, enforceable
against such Person in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or other laws affecting
creditors' rights generally and general principles of equity (whether
considered in a proceeding at law or in equity).
1.2.40. "Environmental Escrow Agreement" is defined in
Section 11.5.2.
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1.2.41. "Environmental Law" means any Legal Requirement or
common law as in effect as of the date hereof relating to (i)
pollution or protection of the environment, (ii) releases or
threatened releases of Hazardous Substances, or (iii) the manufacture,
handling, transport, use, treatment, storage or disposal of Hazardous
Substances.
1.2.42. "Environmental Permits" is defined in Section 5.4.
1.2.43. "ERISA" means the federal Employee Retirement
Income Security Act of 1974 or any successor statute, as amended and
as in effect as of the date hereof.
1.2.44. "Escrow Agent" is defined in Section 11.5.2.
1.2.45. "Escrow Amount" is defined in Section 11.5.2.
1.2.46. "Excluded Securities" means any Securities which
any Seller has elected, on or prior to the fifth (5th) Business Day
preceding the Closing Date, (with the consent of Buyer) to exchange
for Rollover Securities; provided, however, that no such Securities
shall be Excluded Securities under this Agreement unless, prior to
Closing, the applicable Seller has entered into the Rollover
Documents.
1.2.47. "Financial Statements" is defined in Section 5.2.1.
1.2.48. "Financing" is defined in Section 7.4.4.
1.2.49. "Financing Sources" is defined in Section 6.2.
1.2.50. "Foreign Plans" is defined in Section 5.12.
1.2.51. "Generally Accepted Accounting Principles" means
generally accepted accounting principles in the United States as in
effect from time to time and (i) except in the case of Section 3.2.1,
applied on a basis consistent with the preparation of the Financial
Statements, (ii) and, in the case of Section 3.2.1, applied on a basis
consistent with the Balance Sheet.
1.2.52. "Governmental Authority" means any federal, state
or local government, regulatory or administrative agency or judicial
authority (or any department, bureau or division thereof).
1.2.53. "Governmental Order" means any decree, stipulation,
determination or award entered by any Governmental Authority that is
directly applicable to and binding upon a Seller or one of the Steel
Heddle Companies, as applicable.
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1.2.54. "Hazardous Substances" means (i) substances defined
in or regulated as toxic or hazardous or otherwise regulated under the
following federal statutes and their state counterparts, and similar
foreign statutes, as well as such statutes' implementing regulations,
in each case, as amended and as in effect as of the date hereof: the
Hazardous Materials Transportation Act, the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation
and Liability Act, the Clean Water Act, the Safe Drinking Water Act,
the Asbestos Hazard Emergency Response Act, the Atomic Energy Act, the
Toxic Substances Control Act, the Federal Insecticide, Fungicide, and
Rodenticide Act, and the Clean Air Act; (ii) petroleum and petroleum
products, including crude oil and any fractions thereof; (iii) natural
gas, synthetic gas and any mixtures thereof; (iv) PCBs; and (v)
asbestos.
1.2.55. "▇▇▇▇▇ Claim" is defined in Section 11.6.
1.2.56. "HSR Act" is defined in Section 6.1.3.
1.2.57. "Indemnifying Party" is defined in Section 11.1.
1.2.58. "Indemnitee" is defined in Section 11.1.
1.2.59. "Intangibles" is defined in Section 5.6.
1.2.60. "Interim Financial Statements" is defined in
Section 7.9.
1.2.61. "IRS" is defined in Section 5.11.
1.2.62. "Knowledge," with respect to a Person, means the
actual awareness or understanding after reasonable inquiry of the
specified Person with respect to the factors or matters on which a
representation is based. In the case of the Knowledge of the Company,
the term shall mean the Knowledge of any of ▇▇▇▇▇▇▇▇ ▇. Team, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
1.2.63. "Leased Real Property" is defined in Section 5.5.2.
1.2.64. "Leases" is defined in Section 5.5.2.
1.2.65. "Legal Requirement" means any federal, state, local
or foreign statute, ordinance, code, rule or regulation, or any
Governmental Order, or any license, franchise, consent, approval,
permit or similar right granted under any of the foregoing, in each
case other than an Environmental Law.
1.2.66. "Licenses" is defined in Section 5.6.
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1.2.67. "Lien" means any mortgage, pledge, lien, option,
voting trust, security interest, attachment or other similar
encumbrance, provided, however, that the term "Lien" shall not include
(i) statutory liens for Taxes, to the extent that the payment thereof
is not in arrears or otherwise due; (ii) encumbrances in the nature of
zoning restrictions, easements, rights or restrictions of record on
the use of real property if the same do not materially detract from
the value of the property encumbered thereby or materially impair the
use of such property in the Business; (iii) liens to secure landlords,
lessors or renters under leases or rental agreements confined to the
premises rented, to the extent that the payment thereof is not in
arrears or otherwise due; (iv) deposits or pledges made in connection
with, or to secure payment of, worker's compensation, unemployment
insurance, old age pension programs mandated under applicable Legal
Requirements or other social security regulations; (v) liens in favor
of carriers, warehousemen, mechanics and materialmen, liens to secure
claims for labor, materials or supplies and other similar liens, to
the extent that the payment thereof is not in arrears or otherwise
due; and (vi) restrictions on transfer of securities imposed by
applicable state and federal securities laws.
1.2.68. "Losses" means any and all damages, deficiencies,
awards, assessments, amounts paid in good faith settlement, judgments,
fines, penalties, costs and expenses (including reasonable legal costs
and out-of-pocket expenses); provided, however, that the amount of any
such Losses for the purposes of indemnification hereunder shall be
determined net of the Net Insurance Recovery collected by the
Indemnitee under insurance policies with respect to such Loss;
provided further, however, that nothing contained in this Agreement
shall obligate any party to obtain or maintain insurance or to make
more than commercially reasonable efforts to assert any claim or
otherwise seek to recover in respect of any Losses from any insurer.
Further, in calculating the amount of any Losses, there shall be taken
into account the present value (based on a discount factor equal to
the applicable federal rate as determined under Section 1274(d)(1) of
the Code) of any Tax Benefit or Tax liability reasonably expected to
be realized or incurred by the Indemnitee (or any consolidated,
combined or unitary group of which the Indemnitee is also a member)
arising from the incurrence or payment of such Loss.
1.2.69. "Material Adverse Effect" means any change in or
effect on the business of any of the Steel Heddle Companies which has
a material adverse effect on the business, assets, liabilities,
results of operations or financial condition of the Steel Heddle
Companies taken as a whole.
1.2.70. "Maximum Aggregate Loss" is defined in Section
11.3.
1.2.71. "Mfg. Co." means Steel Heddle Mfg. Co., a
Pennsylvania corporation and wholly-owned subsidiary of the Company.
1.2.72. "Mineral Spirits Losses" is defined in Section
11.5.1.
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1.2.73. "Mineral Spirits Releases" is defined in Section
11.5.1.
1.2.74. "Mineral Spirits Remediation" is defined in Section
11.5.1.
1.2.75. "Net Insurance Recovery" means, with respect to any
Person, any insurance proceeds recovered by such Person (or an
Affiliate thereof) in respect of Losses, but excluding proceeds to the
extent (i) premiums will be adjusted, under the terms of the relevant
insurance policy or policies, to reimburse the insurer for the
material part of such recovery or (ii) such Person incurs additional
costs or expenses because filing the insurance claim with respect to
such Losses results in the discontinuation of insurance coverage.
1.2.76. "Non-Compete Period" is defined in Section 7.12.
1.2.77. "Operation and Maintenance Phase" is defined in
Section 11.5.3.
1.2.78. "Options" is defined in the Recitals.
1.2.79. "Ordinary Course of Business" means the ordinary
course of the Steel Heddle Companies' business consistent with their
respective past customs and practices.
1.2.80. "Owned Real Property" is defined in Section 5.5.2.
1.2.81. "Per Share Amount" means (x) the sum of the
Purchase Price, plus the Compensation Tax Benefit, minus the Debt
Payment, minus the Bonus Liability, minus the Unpaid Expenses, minus
the Escrow Amount, plus the aggregate exercise price of all Options,
Warrants and Rights, divided by (y) the sum of the number of shares of
Common Stock outstanding as of the Closing Date, plus the number of
shares of Common Stock issuable upon the exercise of all Options,
Warrants and Rights as of the Closing Date.
1.2.82. "Permits" is defined in Section 5.10.
1.2.83. "Person" means any individual, partnership, limited
liability company, corporation, association, trust, joint venture,
unincorporated organization or other entity.
1.2.84. "Personalty Leases" is defined in Section 5.5.1.
1.2.85. "Potential Parachute Payments" is defined in
Section 7.5.
1.2.86. "Prime" means the rate of interest per annum
publicly announced from time to time by NationsBank, N.A.
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1.2.87. "Proportionate Share" means for any Seller, the
percentage for such Seller listed in the far right-hand column of
Schedule 1 hereto.
1.2.88. "Purchase Price" is defined in Section 3.1.
1.2.89. "Real Property" is defined in Section 5.5.2.
1.2.90. "Real Property Liens" is defined in Section 5.5.2.
1.2.91. "Remediation Completion Costs" is defined in
Section 11.5.7.
1.2.92. "Rights" is defined in the Recitals.
1.2.93. "Rollover Consideration" means the aggregate value
of the Rollover Securities, valued as follows: (a) each such share of
Common Stock shall be valued at the Per Share Amount, (b) each such
Option shall be valued at the Per Share Amount less the exercise price
for such Option, and (c) each such Right shall be valued at the Per
Share Amount less the exercise price for such Right.
1.2.94. "Rollover Documents" means the definitive documents
pursuant to which the Buyer agrees with any Seller to issue Rollover
Securities.
1.2.95. "Rollover Securities" means any shares of common
stock, options or other equity-related interests of the Buyer which
Buyer shall agree to issue to any Seller upon the surrender or
cancellation of Securities held by such Seller.
1.2.96. "SCDHEC" is defined in Section 11.5.1.
1.2.97. "SCDHEC Letter of Credit" means the irrevocable
standby letter of credit No. 919989 in the amount of $671,000.00
issued on behalf of Mfg. Co. by NationsBank, N.A. for the benefit of
the South Carolina Bureau of Solid and Hazardous Waste Management
pursuant to regulations of the SCDHEC.
1.2.98. "Scheduled Termination" is defined in Section
11.5.6.
1.2.99. "Securities" is defined in the Recitals.
1.2.100. "Seller" is defined in the Preamble.
1.2.101. "Seller Partnership" is defined in Section 14.6.
1.2.102. "Sellers' Representative" shall mean ▇▇▇▇▇▇ or
its designee, acting pursuant to the Sellers' Representative
Agreement.
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1.2.103. "Sellers' Representative Agreement" shall mean the
agreement dated as of the date hereof among the Sellers'
Representative, the Company, Mfg. Co. and each of the Sellers.
1.2.104. "Shares" is defined in the Recitals.
1.2.105. "Steel Heddle Companies" means, collectively, the
Company and its Subsidiaries.
1.2.106. "Subsidiary" means any Person of which the Company
(or other specified Person) shall own directly or indirectly through a
Subsidiary, a nominee arrangement or otherwise at least a majority of
the outstanding capital stock (or other shares of beneficial interest)
entitled to vote generally.
1.2.107. "Tax" means any (and in the plural "Taxes" means
all) federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, severance, stamp,
occupation, premium, profit, windfall profit, customs, duties, real
property, personal property, capital stock, social security,
employment, unemployment, disability, payroll, license, employee,
withholding or other tax of every kind and nature arising under or
imposed by any Legal Requirement, including all interest, penalties
and additions with respect to any of the foregoing.
1.2.108. "Tax Benefit" means any reduction in Tax realized
by any Person attributable to the consummation of the transactions
contemplated by this Agreement (or other specified event), which Tax
Benefit shall be determined after first taking all other items of
income, gain, loss, deduction or credit of such Person into account.
1.2.109. "Tax Returns" means all federal, state, local, and
foreign Tax returns, Tax reports, claims for refund of Tax, and
declarations of estimated Tax, or other filings relating to Taxes and
any schedule or attachments to any of the foregoing or amendments
thereto, including (where permitted or required) consolidated,
combined or unitary returns for any group of entities.
1.2.110. "Title Companies" is defined in Section 8.7.
1.2.111. "Unpaid Expenses" means all fees and expenses
payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and to the legal, accounting and
financial advisors to the Steel Heddle Companies and the Sellers
payable by any Steel Heddle Company as of the Closing in connection
with the solicitations of proposals to acquire the Company and the
negotiation, execution and delivery of this Agreement and related
agreements and the Closing hereunder.
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1.2.112. "WARN" means the Worker Adjustment and Retraining
Notification Act of 1988, as amended.
1.2.113. "Warrants" is defined in the Recitals.
1.2.114. "Working Capital" means, as of a specified date,
the sum of the following amounts reflected on a balance sheet of the
Company as of such date: cash and cash equivalents; plus accounts
receivable; plus inventories (at LIFO); plus prepaid expenses; minus
accounts payable; minus accrued and sundry liabilities (other than
accrued interest); in each case determined on a basis consistent with
the Balance Sheet and Exhibit 3.2.1. Further, without limiting Section
3.2, Working Capital shall not include any accruals made after the
date hereof in respect of the Aqua-Tech "superfund" site or any
existing environmental issues associated with the Company's
Greenville, South Carolina site.
1.2.115. "Work Plan" is defined in Section 11.5.3.
2. ACQUISITION.
Upon the terms, subject to the conditions, and in reliance on the
representations, warranties and covenants set forth herein, on the day on which
the Closing (the "Closing") takes place (such date being referred to herein as
the "Closing Date"), each of the Sellers severally agrees to sell, transfer and
deliver to the Buyer the number of Shares set forth opposite such Seller's name
in Schedule 1 (other than any Excluded Securities) and the Buyer agrees to
purchase and acquire from each of the Sellers such Shares for the consideration
specified in Section 3 hereof, and each of the Sellers severally agrees to
execute appropriate documentation to evidence the cancellation of the Options,
Warrants and Rights set forth opposite such Seller's name in Schedule 1 (other
than any Excluded Securities) and the Buyer agrees to deliver to the Seller's
Representative, for further delivery to the applicable Seller, the
consideration for such cancellation specified in Section 3 hereof.
3. PAYMENT AND CLOSING.
3.1. Purchase Price.
3.1.1. Payment of Purchase Price. In consideration of the
sale and transfer of the Securities by the Sellers to the Buyer and
the discharge of the Debt and other transactions provided for herein,
at the Closing, the Buyer will pay an aggregate amount equal to the
sum of $164,150,000 (the "Purchase Price") (subject to later
adjustment pursuant to Section 3.2 below) plus the Compensation Tax
Benefit pursuant to the payment instructions in Section 3.1.3 below.
The parties agree that none of the Purchase Price and Compensation Tax
Benefit shall be allocable to the covenant not to compete in Section
7.12.
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3.1.2. Allocation of Cash Consideration. The Cash
Consideration (as defined in Section 3.1.3 below) shall be allocated
among the Sellers such that (a) each Seller holding Common Stock shall
receive the Per Share Amount for each Share then held by such Seller
(other than any Excluded Securities), (b) each holder of Options
(other than any Excluded Securities) shall receive the Per Share
Amount for each Option to acquire one share of Common Stock then held
less the exercise price for such Option, (c) each holder of Warrants
shall receive the Per Share Amount for each Warrant to acquire one
share of Common Stock then held less the exercise price for such
Warrant and (d) each holder of Rights (other than any Excluded
Securities) shall receive the Per Share Amount for each Right to
acquire one share of Common Stock then held less the exercise price
for such Right.
3.1.3. Payment Instructions. The Purchase Price and the
Compensation Tax Benefit shall be payable at the Closing (i) by wire
transfer of immediately available funds, to such accounts as the
holders of the Debt may specify, of payment in full of the outstanding
Debt other than the DHEC Letter of Credit (the "Debt Payment); (ii) by
wire transfer of immediately available funds of an amount equal to the
Bonus Liability to such accounts as the Persons owed the Bonus
Liability may specify; (iii) by wire transfer of immediately available
funds of an amount equal to the Unpaid Expenses to such accounts as
the Persons owed the Unpaid Expenses may specify; (iv) by wire
transfer of immediately available funds of an amount equal to the
Escrow Amount to such account as may be specified by the Escrow Agent;
(v) by issuance of Rollover Securities in accordance with the Rollover
Documents (which shall be deemed to have a value for purposes of the
payment of the Purchase Price and the Compensation Tax Benefit equal
to the Rollover Consideration); (vi) subject to Section 7.17, by wire
transfer of immediately available funds, the balance of the Purchase
Price and the Compensation Tax Benefit after taking into account all
payments pursuant to clauses (i) though (v) of this Section (such
remaining balance being referred to herein as the "Cash
Consideration"), in accordance with transfer instructions provided to
the Buyer by the Sellers' Representative. Such transfer instructions
with respect to the allocation of the Cash Consideration and the
accounts to which payments thereof shall be provided within two (2)
Business Days prior to Closing, and shall include directions to pay
(a) $3,000,000 to the settlement account established pursuant to
Section 2(iii) of the Seller's Representative Agreement; (b) an amount
sufficient to satisfy any federal, state or local withholding tax
requirements of the Company in respect of the payment of the Cash
Consideration to the Sellers, to an account established for the
Company; and (c) the remaining Cash Consideration to accounts and in
the amounts specified in such instructions. The Buyer's obligations
with respect to the method of payment to the Sellers shall be limited
to making such payments in accordance with the instructions given to
the Buyer by the Sellers' Representative. Each party hereby
acknowledges that the computation of the Compensation Tax Benefit and
Per Share Amount are interdependent and shall be determined by an
iterative process.
3.2. Closing Statement and Purchase Price Adjustment.
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3.2.1. As promptly as practicable, and in any event within
sixty (60) days after Closing, the Buyer shall prepare, and cause
Deloitte & Touche LLP to review (it being understood that the Buyer
shall bear all costs and expenses associated with such review), a
consolidated balance sheet for the Steel Heddle Companies as of the
Closing, before giving effect to the transactions occurring at the
Closing (as initially prepared, and as subsequently determined in
accordance with this Section 3.2, the "Closing Balance Sheet"). The
Closing Balance Sheet shall be prepared on a basis consistent with the
Balance Sheet, even if consistent treatment as such is not the best
treatment or an appropriate treatment, in whole or in part, under
Generally Accepted Accounting Principles. In addition, the Buyer shall
cause Deloitte & Touche LLP to review a written calculation in the
form of Exhibit 3.2.1 calculating the Working Capital of the Company
as of the Closing (the "Closing Working Capital"), based on the
Closing Balance Sheet and on a basis consistent with such Exhibit.
(By way of example, (a) current assets, (b) current liabilities and
(c) Working Capital for April 4, 1998 were $26,511,579, $6,694,841
and $19,816,738, respectively.)
3.2.2. If within twenty (20) days following delivery of the
Closing Balance Sheet and the computation of Closing Working Capital,
the Sellers' Representative has not raised any objection to such
Closing Balance Sheet or computation of Closing Working Capital, then
such Closing Balance Sheet shall be deemed to have been accepted and
the computation of Closing Working Capital shall be binding for
purposes of Section 3.2.3 below. If the Sellers' Representative
raises any objection to such Closing Balance Sheet or computation of
Closing Working Capital within such 20-day period and the Buyer and
the Sellers' Representative cannot agree on the Closing Balance Sheet
or the calculation of Closing Working Capital within twenty (20) days
of such objection, either party may submit the dispute to Coopers &
▇▇▇▇▇▇▇ LLP, or if such firm declines to serve, then to another
nationally recognized accounting firm selected upon mutual agreement
of the parties, for resolution within thirty (30) days or as soon
thereafter as reasonably practicable. Such accounting firm shall
determine, only with respect to the remaining differences so
submitted, whether and to what extent, if any, the Closing Balance
Sheet and the calculation of Closing Working Capital require
adjustment in order to comply with the requirements of Section 3.2.1.
The decision by such accounting firm shall be final and binding on the
parties. The costs and expenses of such accountants shall be paid by
the party whose position is, as ruled by such accounting firm, most
incorrect. The Buyer and the Sellers shall make available to such
accounting firm and each other all relevant books and records and work
papers (including, if available, work papers of their respective
accountants) relating to the Closing Balance Sheet and the computation
of Closing Working Capital and all other information reasonably
requested by such accounting firm.
3.2.3. Upon final determination of the Closing Working
Capital, either by agreement between the Buyer and the Sellers'
Representative or determination in accordance with Section 3.2.2, (a)
if the Closing Working Capital exceeds $19,457,802
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the Purchase Price shall be increased by the amount of such excess,
and (b) if the Closing Working Capital is less than such amount, the
Purchase Price shall be decreased by the amount of such shortfall.
Within ten (10) Business Days after the final determination of the
Closing Working Capital, the Buyer (in the case of any increase in the
Purchase Price) or the Sellers (in the case of a decrease in the
Purchase Price) shall pay in immediately available funds an amount
equal to the amount of such increase or decrease. Any payment made to
the Sellers pursuant to this Section 3.2.3 shall be allocated in
accordance with each Seller's Proportionate Share. The Sellers'
obligations, if any, to the Buyer under this Section 3.2.3 shall be
joint and several. Any payment which is made after the applicable due
date shall bear simple interest at the Prime Rate.
3.3. Time and Place of Closing. The Closing shall take
place at the conference center of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Citicorp Center, ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m. (local time) on May 27, 1998 or
such other date as is jointly specified by the parties, which date shall be not
later than five (5) Business Days after the satisfaction or waiver of all
conditions precedent set forth in Sections 8 and 9 hereof or at such other time
or place upon which the parties may agree.
3.4. Delivery. At the Closing, each of the Sellers shall
deliver to Buyer: (a) the certificate or certificates evidencing all of the
Common Stock held by such Seller; (b) evidence of cancellation of all Options,
Warrants or Rights held by such Seller and the release of all liabilities of
the Company related thereto; (c) certificates executed by the Secretary of
Company certifying as to the resolutions of the Board of Directors and the
stockholders of the Company authorizing the execution and delivery of this
Agreement and consummation of the transactions contemplated by this Agreement;
(d) a certificate of the Secretary of the Company certifying as to the
incumbency of the officers of the Company and as to the signatures of such
officers who have executed documents delivered at the Closing on behalf of the
Company; (e) a certificate, dated within three (3) Business Days of the Closing
Date, of the Secretary of the Commonwealth of Pennsylvania establishing that
the Company is in existence and otherwise is in good standing to transact
business in its state of incorporation; (f) certificates, dated within three
(3) Business Days of the Closing Date, of the Secretaries of State of the
states of incorporation of each of the Subsidiaries establishing that each of
the Subsidiaries is in existence and otherwise is in good standing to transact
business in its state of incorporation; (g) certificates, dated within ten (10)
days of the Closing Date, of the Secretaries of State of the states in which
the Company is qualified to do business, to the effect that the Company is
qualified to do business and is in good standing as a foreign corporation in
each of such states; and (h) certificates, dated within ten (10) days of the
Closing Date, of the Secretaries of State of the states in which each of the
Subsidiaries is qualified to do business, to the effect that each of the
Subsidiaries is qualified to do business and is in good standing as a foreign
corporation in each of such states (it being understood that the deliveries
specified in clauses (c)-(h) of this Section 3.4 shall be made once on behalf
of all Sellers); and the Buyer shall deliver: (w) the Purchase Price and the
Compensation Tax Benefit, as specified in Section 3.1; (x) a certificate
executed by the Secretary of the Buyer, certifying as to the resolutions of the
Board of Directors and stockholders of the Buyer authorizing the execution and
delivery of this Agreement and consummation of the
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transactions contemplated by this Agreement; (y) a certificate of the Secretary
of the Buyer certifying as to the incumbency of the officers of the Buyer, and
as to the signatures of such officers who have executed documents delivered at
the Closing on behalf of the Buyer; and (z) a certificate, dated within three
(3) Business Days of the Closing Date, of the Secretary of State of the State
of Delaware establishing that the Buyer is in existence and otherwise is in
good standing to transact business in its state of incorporation.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the Sellers,
severally and not jointly, represents and warrants, but only with respect to
such Seller and the Securities owned by such Seller, that:
4.1. Organization and Authority. In the case of each Seller that
is not an individual, such Seller is an entity duly formed, legally existing
and in good standing under the laws of the jurisdiction of its organization and
such Seller has full power and authority to enter into this Agreement, to carry
out and perform its obligations hereunder and to consummate the transactions
contemplated hereby. In the case of each Seller that is an individual, such
Seller has the legal capacity to enter into this Agreement, to carry out and
perform its obligations hereunder and to consummate the transactions
contemplated hereby.
4.2. Authorization and Enforceability. This Agreement has been
duly authorized, executed and delivered by, and is Enforceable against, such
Seller.
4.3. Non-Contravention, Etc. Except as set forth in Schedule 4.3,
the execution and delivery of this Agreement by such Seller and the
consummation by such Seller of the Closing hereunder in accordance with the
terms and conditions of this Agreement do not and will not conflict with or
result in the breach of any of the terms or provisions of, or constitute a
default under, or require any consent, waiver, approval or authorization under,
any Contractual Obligation to which such Seller is a party or by which such
Seller is, or the Securities to be sold or canceled by such Seller hereunder
are, bound or any Legal Requirement applicable to such Seller or to the
Securities to be sold or canceled by such Seller. No consent is required to be
obtained by such Seller in connection with the execution, delivery and
performance of this Agreement by such Seller or the sale of the Securities to
be sold or canceled by such Seller as contemplated hereby, except as set forth
in Schedule 4.3, and other than any consent where the failure of such Seller to
obtain such consent would not materially and adversely affect the Seller's
ability to consummate the Closing hereunder in accordance with the terms and
conditions of this Agreement and would not prevent such Seller from performing
in all material respects any of its obligations under this Agreement.
4.4. Title to Securities. Such Seller is the record and beneficial
owner of the Securities set forth opposite such Seller's name on Schedule 1,
and, except as set forth in Schedule 1, such Seller owns the Securities, free
and clear of any Liens. Upon delivery to the Buyer of certificates
representing such Securities, and upon such Seller's receipt of payment
therefor, title to the Securities held by such Seller will pass to the Buyer,
free and clear of any Liens.
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4.5. Brokers, Etc. Except for payments to be made by the Sellers
to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., no broker, finder, investment bank or similar agent is
entitled to any brokerage or finder's fee in connection with the transactions
contemplated by this Agreement based upon agreements or arrangements made by or
on behalf of such Seller.
5. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY. The Company
represents and warrants that:
5.1. Corporate Matters, Etc.
5.1.1. Organization, Power and Standing of the Company.
The Company (i) is a corporation duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of
Pennsylvania; (ii) has the corporate power and authority to own,
operate or lease its properties and to carry on its business in all
material respects as currently conducted; and (iii) is in good
standing as a foreign corporation and is duly licensed or qualified to
transact business in each jurisdiction in which the character of its
properties owned or leased or the nature of its activities makes such
qualification necessary, except where failure to be so qualified has
not had, and would not reasonably be expected to have, a Material
Adverse Effect.
5.1.2. Non-Contravention, Etc. Except for items listed on
Schedule 5.1.2, neither the execution, delivery or performance of this
Agreement nor the consummation of the Closing hereunder in accordance
with the terms and conditions of this Agreement does or will
constitute, result in or give rise to (with or without notice or
passage of time) (i) a breach, violation or default under any Legal
Requirement applicable to any of the Steel Heddle Companies; (ii) a
breach of or default under any provision of the Charter or By-Laws of
any of the Steel Heddle Companies; (iii) the imposition of any Lien
upon any asset of any of the Steel Heddle Companies (except for liens
created by or on behalf of the Buyer); or (iv) a material breach of or
default under (or the acceleration of the time for performance of any
material obligation under), or require any consent, waiver, approval
or authorization under, any Contractual Obligation of any of the Steel
Heddle Companies. Except as set forth in Schedule 5.1.2, no approval,
consent, waiver, authorization or other order of, and no declaration,
filing, registration, qualification or recording with, any
Governmental Authority is required to be obtained or made by or on
behalf of any of the Steel Heddle Companies in connection with the
execution, delivery or performance of this Agreement and the
consummation of the Closing hereunder in accordance with the terms and
conditions of this Agreement, except those (x) which shall have been
obtained or made on or prior to, and shall be in full force and effect
at, the Closing Date and (y) where failure to obtain such approval,
consent, waiver, authorization or other order, or to make such
declaration, filing, registration, qualification or recording, in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement.
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5.1.3. Capital Stock. The entire authorized capital stock
of the Company consists of (i) 2,000,000 shares of Class A Common
Stock, of which as of the date hereof 91,080 shares are issued and
outstanding and 54,596 shares are reserved for issuance upon exercise
of the Options, Warrants and Rights, and (ii) 8,000,000 shares of
Class B Common Stock, of which as of the date hereof 912,250 shares
are issued and outstanding. The Shares constitute all of the issued
and outstanding shares of Common Stock of the Company and are duly
authorized, validly issued and are fully paid and nonassessable. The
Securities are held of record in the number and by the Sellers as set
forth on Schedule 1. Except for this Agreement and the Options,
Warrants and Rights, there is no Contractual Obligation pursuant to
which the Company has granted any option, warrant or other right to
any Person to acquire the shares of Common Stock or any other
securities of, or equity interests in, the Company.
5.1.4. Subsidiaries. Schedule 5.1.4 sets forth a true and
complete list of all Subsidiaries of the Company, including the name
and jurisdiction of organization of each such Subsidiary. Each
Subsidiary listed on Schedule 5.1.4 is a corporation or other entity
duly formed and validly existing under the laws of its jurisdiction of
organization, has the corporate or other requisite power and authority
to own, operate or lease the properties and assets now owned, operated
or leased by such Subsidiary and to carry on its business in all
material respects as currently conducted, and is duly qualified as a
foreign corporation or other entity in each jurisdiction indicated on
Schedule 5.1.4, and there are no other jurisdictions in which any such
Subsidiary is required to be qualified, except where the failure to be
so qualified has not had, and would not reasonably be expected to
have, a Material Adverse Effect. Except as set forth in Schedule
5.1.4, each Subsidiary listed on Schedule 5.1.4 is wholly-owned by the
Company (either directly or indirectly by way of ownership through
another Subsidiary listed on Schedule 5.1.4). Except for the
Subsidiaries, the Company does not own, directly or indirectly, any
interest or investment (whether equity or debt) in any Person.
5.1.5. Corporate Records. The Company has heretofore
delivered or made available to the Buyer true and complete copies of
the Charter and By-laws of each of the Steel Heddle Companies, in each
case as in effect on the date hereof. Schedule 5.1.5 lists the
directors and officers of each of the Steel Heddle Companies. The
Company has delivered or made available to the Buyer the minute books
(containing the records of meetings of the stockholders, the Board of
Directors, and any committees of the Board of Directors), the stock
certificate books, and the stock record books of each of the Steel
Heddle Companies, and such minute books, stock certificate books, and
stock record books are correct and complete in all material respects.
5.2. Financial Statements, Etc.
5.2.1. Financial Information. The Buyer has been furnished
with the consolidated audited balance sheets of the Company and its
consolidated Subsidiaries as of January 3, 1998 (the "Balance Sheet"),
December 28, 1996 and December 30, 1995
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and the related statements of earnings and shareholders equity and
cash flows for the fiscal years ended January 3, 1998, December 28,
1996 and December 30, 1995, accompanied by the notes thereto and by
the reports thereon of Ernst & Young LLP (collectively, the "Financial
Statements").
5.2.2. Character of Financial Information. Unless
otherwise disclosed therein, the Financial Statements were prepared in
accordance with Generally Accepted Accounting Principles consistently
applied throughout the periods specified therein and present fairly,
in all material respects, the consolidated financial position and
results of operations of the Company and its Subsidiaries as of the
dates and for the periods specified therein in accordance with
Generally Accepted Accounting Principles, and to the Knowledge of the
Company are consistent with the books and records of the Steel Heddle
Companies (which books and records are to the Knowledge of the Company
correct and complete in all material respects).
5.3. Change in Condition Since Balance Sheet Date. Except for
matters set forth in Schedule 5.3, since the Balance Sheet Date and until the
date hereof:
(a) the Business has been conducted only in the Ordinary
Course of Business (except as otherwise required or explicitly
permitted by the terms of this Agreement) and other than transactions
between or among the Company and its domestic Subsidiaries, neither
the Company nor any of its Subsidiaries has:
(i) entered into any Contractual Obligation
other than this Agreement relating to
(A) the sale of any capital stock or
equity interest in any of the Steel
Heddle Companies, (B) the purchase of
assets constituting a business or (C)
any merger, consolidation or other
business combination;
(ii) settled or agreed to settle any Action
in excess of $100,000 or any claim of
any other Person in excess of $100,000;
(iii) subjected to any Lien any of their
assets other than (A) conditional sales
or similar security interests granted in
connection with the lease or purchase of
equipment or supplies in the Ordinary
Course of Business; and (B) Liens
disclosed on Schedule 5.5.1;
(iv) sold, leased, transferred or exchanged
any material property for less than the
fair value thereof; or
(v) declared or paid any dividends on any
shares of its capital stock;
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(b) none of the Steel Heddle Companies has entered into
any Contractual Obligation to do any of the actions referred to in
clause (a) above;
(c) there has not been any resignation or threatened
resignation of any key employee of any of the Steel Heddle Companies;
and
(d) there has not been any material adverse change or any
event that would reasonably be expected to cause any material adverse
change in the Business, assets, liabilities, results of operations or
financial condition of the Steel Heddle Companies, taken as a whole,
other than changes resulting from general economic, financial or
market conditions or circumstances generally affecting the Business.
5.4. Environmental Matters, Etc. Except as set forth on Schedule
5.4 or has not had, or would not reasonably be expected to have, a Material
Adverse Effect, each of the Steel Heddle Companies has complied and is in
compliance with all Environmental Laws. Except as set forth on Schedule 5.4,
there is no Action pending or, to the Knowledge of the Company, threatened
against any of the Steel Heddle Companies in respect of (i) noncompliance by
any of the Steel Heddle Companies with any Environmental Laws or (ii) the
release or threatened release into the environment of any Hazardous Substance
at the Real Property or by any of the Steel Heddle Companies; or (iii) the
handling, storage, use, transportation or disposal of any Hazardous Substance
by any of the Steel Heddle Companies; except for Actions filed or threatened
after the date hereof that in the aggregate have not had, or would not be
reasonably expected to have, a Material Adverse Effect (it being understood
that the Company shall promptly notify the Buyer of any such Action before
Closing). Except as set forth on Schedule 5.4. each of the Steel Heddle
Companies has obtained and complied with, and is in compliance with, all
permits, licenses and other authorizations that are required pursuant to
Environmental Laws for the occupation of its facilities and the operation of
the Business (the "Environmental Permits"), except where such noncompliance or
the failure to obtain Environmental Permits has not had, or would not
reasonably be expected to have, a Material Adverse Effect. Except as set forth
on Schedule 5.4, none of the Steel Heddle Companies has received any notice,
report or other written information regarding any actual or alleged violation
of Environmental Laws or any liabilities or potential liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise) thereunder, including
any investigatory, remedial or corrective obligations, relating to any of the
Steel Heddle Companies or their facilities arising under Environmental Laws.
Except as set forth on Schedule 5.4, to the Knowledge of the Company, none of
the Steel Heddle Companies, or their respective predecessors or Affiliates, has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled or released any Hazardous Substance, or owned or operated
any property or facility in a manner that has given or would give rise to
liabilities, including any liability for response costs, corrective action
costs, personal injury, property damage, natural resources damages or attorneys
fees, pursuant to any Environmental Laws. Except as set forth on Schedule 5.4,
to the Knowledge of the Company, none of the property or facilities (including
the Real Property) owned or operated by any of the Steel Heddle Companies is
contaminated by any Hazardous Substance. To the Knowledge of the Company,
except as set forth on Schedule 5.4, none of the Steel Heddle Companies has,
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either expressly or by operation of law, assumed, undertaken or otherwise
become subject to any liability, including any obligation for corrective or
remedial action, of any other Person relating to Environmental Laws. Except as
set forth on Schedule 5.4, to the Knowledge of the Company, no facts, events or
conditions relating to the past or present facilities, properties or operations
of any of the Steel Heddle Companies or their respective predecessors or
Affiliates are reasonably likely to prevent, hinder or limit continued
compliance with Environmental Laws or give rise to any investigatory, remedial
or corrective obligations pursuant to Environmental Laws.
5.5. Real and Personal Property.
5.5.1. Except as has not had and would not reasonably be
expected to have a Material Adverse Effect, each of the Steel Heddle
Companies has valid title to all of its material personal property,
and such material personal property is not subject to any Lien except
as set forth on Schedule 5.5.1. Except as has not had and would not
reasonably be expected to have a Material Adverse Effect, (i) all
material leases and licensing agreements for personal property
("Personalty Leases") leased or licensed by any of the Steel Heddle
Companies are valid and in full force; (ii) the Steel Heddle Companies
have performed in all material respects all obligations required to be
performed by them under such Personalty Leases; and (iii) no event or
condition exists which constitutes or, with the giving of notice or
the passage of time or both, would constitute a material default by
any of the Steel Heddle Companies as lessee or licensee under such
Personalty Leases.
5.5.2. (a) Attached as Schedule 5.5.2 is the address and
legal description of all real property owned by the Company or any
Subsidiary (the "Owned Real Property"). The Company or its applicable
Subsidiary has good and marketable title in and to all of the Owned
Real Property subject to no Liens, or other licences, material
encroachments, encumbrances or other defects in title (collectively,
the "Real Property Liens") except for those listed on Schedule
5.5.2(a).
(b) Attached as Schedule 5.5.2(b) is a list of all
leases, subleases and other occupancy agreements, including all
amendments, extensions and other modifications (the "Leases") relating
to the lease or sublease of real property to, or the occupancy of any
real property by, any Steel Heddle Company (the "Leased Real
Property"; the Owned Real Property and the Leased Real Property are
collectively referred to herein as the "Real Property") to which the
Company or any Subsidiary is a party. Except as has not had and would
not reasonably be expected to have a Material Adverse Effect, (i) all
Leases to the Steel Heddle Companies are valid and in full force and
effect; (ii) the Steel Heddle Companies have performed in all material
respects all obligations required to be performed by them under such
Leases; and (iii) no event or condition exists which constitutes or,
with the giving of notice or passage of time or both, would constitute
a material default by any of the Steel Heddle Companies as lessee
under such Lease.
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(c) The Real Property constitutes all of the real
property owned or leased in connection with the Business. Except as
set forth on Schedule 5.5.2(b), other than the Company and its
Subsidiaries, there are no parties in possession or parties leasing or
occupying any of the Owned Real Property. The Owned Real Property is
in condition and repair sufficient in all material respects for the
conduct of the Business. The Owned Real Property and all plants,
buildings and improvements located thereon conform to all applicable
building, zoning and other laws, ordinances, rules and regulations
except where such failure or violation has not had, or would not
reasonably be expected to have, a Material Adverse Effect. All
permits, licenses and other approvals necessary for the current
occupancy and use of the Owned Real Property have been obtained, are
in full force and effect and have not been violated, except where such
failure or violation has not had, or would not reasonably be expected
to have, a Material Adverse Effect. All improvements located on the
Real Property have direct or indirect access to a public road, except
where such failure to have access has not had, or would not reasonably
be expected to have, a Material Adverse Effect. The Company has not
received any notice of any condemnation proceeding affecting any
material portion of the Owned Real Property. To the Knowledge of the
Company, there are no outstanding options or rights of first refusal
with respect to the purchase or use of any of the Owned Real Property.
5.6. Intellectual Property Rights. Schedule 5.6 lists all material
patents, trade and product names, trademarks, service marks, logos and
copyrights (including registrations and applications therefor) that are owned
or licensed by any of the Steel Heddle Companies, other than commercially
available software programs (the "Intangibles"). Schedule 5.6 also lists each
license or other Contractual Obligation under which any Intangible is licensed
by any of the Steel Heddle Companies as licensee (the "Licenses"). Except as
disclosed on Schedule 5.6 or Schedule 5.7, there is no license or other
Contractual Obligation under which any of the Steel Heddle Companies is a
licensor with respect to any Intangibles. Except has not had or would
reasonably be expected to have a Material Adverse Effect, use by the Steel
Heddle Companies of the Intangibles does not infringe any rights of any third
party. To the Knowledge of the Company, no activity of any third party
infringes upon the rights of the Steel Heddle Companies with respect to any of
the Intangibles. Except has not had or would reasonably be expected to have a
Material Adverse Effect, the Steel Heddle Companies own and possess all right,
title and interest in and to, or have a valid and enforceable license to use,
the Intangibles, free and clear of all Liens.
5.7. Certain Contractual Obligations. Set forth on Schedule 5.7
is a true and complete list of all of the following Contractual Obligations of
the Steel Heddle Companies (other than (i) the Options, Warrants and Rights,
and (ii) Contractual Obligations incurred solely in connection with the
transactions contemplated hereby):
(a) all collective bargaining agreements;
(b) all written employment or consulting agreements
pursuant to which services are rendered to the Steel Heddle Companies,
in each case which are likely to
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involve payments by or on behalf of any of the Steel Heddle Companies
in excess of $100,000 per year;
(c) all Contractual Obligations under which any of the
Steel Heddle Companies is or will after the Closing be restricted in
any respect from carrying on their respective business or other
activities conducted by them or presently contemplated to be conducted
by them anywhere in the world (other than use restrictions contained
in any of the Leases and Personalty Leases that are of the type and
scope customarily found in such Contractual Obligations);
(d) all Contractual Obligations to sell or otherwise
dispose of any assets (other than products pursuant to purchase orders
or agreements entered into in the Ordinary Course of Business) having
a fair market value in excess of $250,000, individually or $500,000 in
the aggregate;
(e) all Contractual Obligations between any of the
Steel Heddle Companies on the one hand and any Affiliate of any of the
Steel Heddle Companies (other than one of the other Steel Heddle
Companies) on the other hand;
(f) all Contractual Obligations (including partnership
and joint venture agreements) under which (i) any of the Steel Heddle
Companies has any liability or obligation for Debt, (ii) a Lien is
imposed on any of its assets or (iii) any Person has any liability or
obligation constituting or giving rise to a guarantee of any liability
or obligation of any of the Steel Heddle Companies, in either case
involving any Debt or liability in excess of $100,000 individually or
$500,000 in the aggregate;
(g) all Contractual Obligations pursuant to which any
of the Steel Heddle Companies incurred an obligation in respect of
indemnification obligations, purchase price adjustment or otherwise
either (x) not in the Ordinary Course of Business, or (y) in
connection with any (i) acquisition or disposition of assets
constituting a business or securities representing a controlling
interest in any Person; (ii) merger, consolidation or other business
combination, or (iii) series or group of related transactions or
events of a type specified in subclauses (i) through (ii);
(h) all Contractual Obligations pursuant to which any
of the Steel Heddle Companies may be expected to perform services with
a value in excess of $250,000 individually or $500,000 in the
aggregate per year and which cannot be canceled by any of the Steel
Heddle Companies within ninety (90) days, except for customer purchase
orders received in the Ordinary Course of Business;
(i) all Contractual Obligations pursuant to which any
of the Steel Heddle Companies may be obligated to pay for goods and
services to be delivered or performed in excess of $250,000
individually or $500,000 in the aggregate per year, except for
purchase orders issued in the Ordinary Course of Business;
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(j) any non-solicitation, non-competition or material
confidentiality agreement under which any of the Steel Heddle
Companies has any obligation of non-solicitation, non-competition or
confidentiality;
(k) all profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other
material plan or arrangement for the benefit of any current or former
director, officer, or employee of any of the Steel Heddle Companies;
and
(l) any lease, sublease, license or sublicense of
personal property from or to any third parties providing for payments
in excess of $100,000 individually or $250,000 in the aggregate or any
material lease, sublease, license or sublicense of personal property
providing for a term or duration in excess of twelve (12) months from
the date hereof (without considering any option or right thereunder to
terminate the term or duration thereof prior to the expiration
thereof).
Each of the Contractual Obligations listed on Schedule 5.7 shall be referred to
herein collectively as the "Contracts". No breach or default in performance by
any of the Steel Heddle Companies under any of the Contracts has occurred and
is continuing, and no event has occurred which with notice or lapse of time or
both would constitute such a breach or default, other than any breach or
default which has not had, or would not reasonably be expected to have, a
Material Adverse Effect. To the Knowledge of the Company, no material breach
or default by any other Person under any of the Contracts has occurred and is
continuing, and no event has occurred which with notice or lapse of time or
both would constitute such a breach or default. The Company has made each
written Contract available to the Buyer, and has provided a written summary of
each oral Contract to the Buyer. Each of the Contracts is valid, binding and
enforceable in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights, or the applicability of
equitable principles.
5.8. Insurance, Etc. Schedule 5.8 is a true and accurate list as
of the date hereof of all material policies or binders of insurance covering
the operations of the Steel Heddle Companies. The Company has delivered or
made available to the Buyer true and accurate copies of all such policies or
binders as in effect on the date hereof. To the Knowledge of the Company, none
of the Steel Heddle Companies is in any material default with respect to its
obligations under any of such policies.
5.9. Litigation, Etc. Except as set forth on Schedule 5.9 or has
not had, or would not reasonably be expected to have, a Material Adverse
Effect, there is no Action involving any of the Steel Heddle Companies pending
or, to the Knowledge of the Company, threatened. There is no Action pending
or, to the Knowledge of the Company, threatened in writing, which seeks
rescission of or seeks to enjoin the consummation of this Agreement or any of
the transactions contemplated hereby.
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5.10. Compliance with Laws, Etc. Each of the Steel
Heddle Companies has complied and is in compliance with, and the operations of
the Business have been and are in compliance with, applicable Legal
Requirements, except as set forth in Schedule 5.10, or as have not had, and
would not reasonably be expected to have, a Material Adverse Effect. The Steel
Heddle Companies have been granted and have complied with and are in compliance
with all licenses, permits, consents, approvals, franchises and other
authorizations under any Legal Requirement necessary for the conduct of the
Business or the ownership or operation of the Owned Real Property (the
"Permits"), except where the failure to obtain or to comply with such Permits
has not had, and would not reasonably be expected to have, a Material Adverse
Effect. The Company has not received any written notice that any Governmental
Authority or other licensing authority will revoke, cancel, rescind, materially
modify or refuse to renew in the ordinary course any of the Permits.
5.11. Tax Matters.
Except as set forth on Schedule 5.11:
(a) Each of the Steel Heddle Companies has filed or has
had filed on its behalf all Tax Returns that it was required to file
on or before the date hereof (or the Closing Date), and has paid or
accrued in accordance with Generally Accepted Accounting Principles on
the Closing Balance Sheet all Taxes through the Closing Date, except
where the failure to file Tax Returns or to pay Taxes has not had, or
would not reasonably be expected to have, a Material Adverse Effect,
or except to the extent of any Taxes arising as a result of any
disallowance of any deductions (and any corresponding imposition of
any withholding) claimed or expected to be claimed in respect of items
included in the calculation of the Compensation Tax Benefit;
(b) all deficiencies asserted in writing and any
assessments made as a result of any examinations of the Tax Returns
referred to in clause (a) by the Internal Revenue Service ("IRS") or
the appropriate state, local or foreign taxing authority have been
paid in full;
(c) none of the Steel Heddle Companies has received any
written notice of any audit, claim, deficiency or assessment pending
or proposed with respect to Taxes of any of the Steel Heddle
Companies;
(d) none of the Steel Heddle Companies is party to any
written agreements or waivers extending the statutory period of
limitation applicable to any Taxes of the Steel Heddle Companies;
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(e) to the Company's Knowledge, none of the Steel Heddle
Companies (i) files or is required to file any combined, consolidated
or unitary federal, state, local or foreign Tax Returns (other than
Tax Returns filed by a group the common parent of which was the
Company) and (ii) is a party to any Contractual Obligation relating to
the allocation or sharing of Taxes;
(f) there are no Tax liens (other than liens for current
Taxes not yet due and payable) upon any properties or assets of any of
the Steel Heddle Companies;
(g) all of the Steel Heddle Companies have duly withheld
and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, shareholder or other Person that required
withholding (and have otherwise complied with all applicable laws
relating to the payment and withholding of Taxes), except where the
failure to withhold or pay such Taxes has not had, or would not
reasonably be expected to have, a Material Adverse Effect;
(h) none of the Steel Heddle Companies have made any
election under Section 341(f) of the Code (or any corresponding
provision of state, local or foreign income Tax law);
(i) none of the Steel Heddle Companies has any current
obligation to indemnify or otherwise assume or succeed to the
liability of any Person other than any of the Steel Heddle Companies
for the payment of Taxes other than in the ordinary course of its
business; and
(j) none of the Steel Heddle Companies will be required
to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of (i) any change in method
of accounting made by any of the Steel Heddle Companies prior to the
Closing Date for a taxable period ending on or prior to the Closing
Date, (ii) any closing agreement described in Section 7121 of the Code
(or any corresponding provision of state, local or foreign income tax
law) entered into by any of the Steel Heddle Companies prior to the
Closing Date, or (iii) any installment sale made prior to the Closing
Date.
5.12. Employee Benefit Plans.
(a) Schedule 5.12 lists each employee benefit plan,
program or policy (including each "employee benefit plan" within the
meaning of Section 3(3) of ERISA) that is maintained or otherwise
contributed to by the Company or any of its Subsidiaries or with
respect to which any of the Steel Heddle Companies has any liability
(collectively, the "Company Plans").
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(b) With respect to each of the Company Plans, the
Company has made available to the Buyer a current, accurate and
complete copy (or, to the extent no such copy exists, an accurate
description) thereof and, to the extent applicable, (i) any related
trust agreement, annuity contract or other funding instrument pursuant
to which the Company is obligated; (ii) any summary plan description;
(iii) the two (2) most recent annual Forms 5500 (if applicable) with
respect to such Company Plans; (iv) the two (2) most recent actuarial
valuation reports, if applicable; and (v) if such Company Plan is
intended to be a qualified single employer plan under Section 401(a)
of the Code, the most recent favorable determination letter received
from the Internal Revenue Service.
(c) Except as set forth in Schedule 5.12 (i) each Company
Plan is in compliance as of the date hereof with its terms and the
applicable provisions, if any, of ERISA and the Code, except where
noncompliance does not have, or would not be reasonably expected to
have, a Material Adverse Effect; (ii) each Company Plan that is
intended to be qualified within the meaning of Section 401(a) of the
Code has received a favorable determination letter from the IRS as to
its qualification, and nothing has occurred since the date of such
determination letter that would reasonably be expected to adversely
affect the qualified status of such Company Plan; (iii) to the
Knowledge of the Company as of the date of this Agreement no
"reportable event" (as such term is used in Section 4043 of ERISA),
"prohibited transaction" (as such term is used in Section 4975 of the
Code or Section 406 of ERISA) or "accumulated funding deficiency" (as
such term is used in Section 412 or 4971 of the Code) has heretofore
occurred with respect to any Company Plan; (iv) no material litigation
or administrative or other proceedings involving the Company Plans
have occurred or, to the Knowledge of the Company, are threatened; (v)
each of the Steel Heddle Companies has complied with the health care
continuation requirements of Part 6 of Subtitle B of Title I of ERISA
("COBRA") with respect to employees and their spouses, former spouses
and dependents, except where failure to comply has not had, or would
not reasonably be expected to have, a Material Adverse Effect; and
(vi) none of the Steel Heddle Companies has any obligation under any
Company Plan to provide health or life insurance benefits to former
employees of any of the Steel Heddle Companies except as specifically
required by COBRA or state law; and (vii) no asset of the Steel Heddle
Companies that is to be acquired by the Buyer, directly or indirectly,
pursuant to this Agreement is subject to any Lien under Section 412 of
the Code or ERISA.
(d) None of the Steel Heddle Companies maintains or
contributes to any "multiemployer plan" (as such term is defined in
Section 3(37) of ERISA) or has incurred any withdrawal liability with
respect to any such plan.
(e) None of the Steel Heddle Companies has any liability
with respect to any "employee benefit plan" (as defined in Section
3(3) of ERISA) solely by reason of being treated as a single employer
under Section 414 of the Code with any trade, business or entity other
than the Steel Heddle Companies.
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(f) Except as set forth in Schedule 5.12, none of the
Steel Heddle Companies contributes to, maintains or sponsors or has
any liability with respect to any employee benefit plan, agreement or
arrangement applicable to employees located outside the United States
(the "Foreign Plans"). Each Foreign Plan is in compliance with all
laws applicable thereto and the respective requirements of such
Foreign Plan's governing documents, except where such noncompliance
does not have, or would not reasonably be expected to have, a Material
Adverse Effect.
5.13. Brokers, Etc. Except for payments to be made by the Sellers
to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., no broker, finder, investment bank or similar agent is
entitled to any brokerage or finder's fee in connection with the transactions
contemplated by this Agreement based upon agreements or arrangements made by or
on behalf of any of the Steel Heddle Companies or the Sellers.
5.14. Absence of Undisclosed Liabilities. Except for liabilities
disclosed in the Balance Sheet or incurred in the Ordinary Course of Business
since the Balance Sheet Date, and except as listed on Schedule 5.14, none of
the Steel Heddle Companies has as of the date hereof, or will have as of the
Closing Date, any liabilities of the type required by Generally Accepted
Accounting Principles to be set forth on the face of a balance sheet (as
opposed to the notes thereto) prepared as of the date hereof or as of the
Closing Date, as the case may be.
5.15. Labor. Except as set forth on Schedule 5.15, to the Knowledge
of the Company, no key executive employee and no group of employees or
independent contractors of any Steel Heddle Company has any plans to terminate
his, her or its employment or relationship as an independent contractor with
the Seller. Except as set forth in Schedule 5.15, to the Knowledge of the
Company, no organizational effort is presently being made or threatened by or
on behalf of any labor union with respect to any employees of any of the Steel
Heddle Companies and none of the employees of any of the Steel Heddle Companies
are represented by labor union. The Company has not engaged in any unfair
labor practice except where any such unfair labor practice has not had, and
would not reasonably be expected to have, a Material Adverse Effect, and to the
Knowledge of the Company, no complaint therefor has been asserted. There is no
labor strike, dispute, slowdown or stoppage pending or, to the Knowledge of the
Company, threatened, against any of the Steel Heddle Companies.
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants as follows:
6.1. Corporate Matters, Etc.
6.1.1. Organization, Power and Standing of the Buyer. The
Buyer is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and
has full power and authority, corporate and otherwise, to enter into
this Agreement, to carry out and perform its obligations hereunder and
to consummate the transactions contemplated hereby.
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6.1.2. Authorization and Enforceability. This Agreement has
been duly authorized, executed and delivered by, and is Enforceable
against, the Buyer.
6.1.3. Non-Contravention, Etc. The execution, delivery and
performance of this Agreement by the Buyer and the consummation by the
Buyer of the Closing hereunder in accordance with the terms and
conditions of this Agreement do not and will not conflict with or
result in the breach of any terms or provisions of, or constitute a
default under, any Contractual Obligation or the Charter or By-Laws of
the Buyer or a breach of any Legal Requirement applicable to the
Buyer. Except for satisfaction of the notification requirements of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), no consent is required to be obtained or made by or
on behalf of the Buyer in connection with the execution, delivery or
performance of this Agreement and the consummation of the transactions
contemplated hereby, except (i) for items which shall have been
obtained or made on or prior to, and shall be in full force and effect
at, the Closing Date and (ii) where failure to obtain such consent
would not materially and adversely affect the Buyer's ability to
consummate the Closing hereunder in accordance with the terms and
conditions of this Agreement and would not prevent the Buyer from
performing in all material respects any of its obligations under this
Agreement.
6.2. Financial Condition, Etc. The Buyer has, as of the date
hereof, received and provided the Company with true and correct copies of
executed commitment letters (the "Commitment Letters") from certain
institutional lenders and investors with respect to secured bank facilities,
unsecured subordinated debt financing and equity financing (such persons being
collectively referred to as the "Financing Sources") and, subject to its
receipt of the financing contemplated by the Commitment Letters, will have as
of the Closing Date funds in an aggregate amount sufficient to (i) pay the
Purchase Price and all contemplated fees and expenses related to the
transactions contemplated by this Agreement and (ii) provide adequate working
capital for the Business.
6.3. Investment Intent, Related Matters. The Buyer is purchasing
the Securities for its own account and has the present intention of holding the
Securities for investment purposes and not with a view to, or for sale in
connection with, any distribution thereof in violation of any federal or state
securities laws.
6.4. Litigation. Except as has not had, or would not reasonably be
expected to have, a material adverse effect on the ability of the Buyer to
perform its obligations under this Agreement, there is no Action pending, or,
to the Knowledge of the Buyer, threatened against the Buyer or any of its
Affiliates. There is no Action pending, or, to the Knowledge of the Buyer,
threatened in writing, which seeks rescission of or seeks to enjoin the
consummation of this Agreement or any of the transactions contemplated hereby.
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6.5. Brokers, Etc. Except for customary transaction fees payable
by the Buyer to certain stockholders of the Buyer, no broker, finder,
investment bank or similar agent is entitled to any brokerage or finder's fee
in connection with the transactions contemplated by this Agreement based upon
agreements or arrangements made by or on behalf of the Buyer or any of its
Affiliates.
7. CERTAIN AGREEMENTS OF THE PARTIES.
7.1. Payment of Transfer Taxes and Other Charges. The Buyer shall
be responsible for and shall pay all real property Taxes, sales Taxes,
documentary stamp Taxes, recording charges and other similar Taxes, and the
Sellers shall pay all stock transfer Taxes, each arising in connection with the
transactions contemplated by this Agreement. Each of the parties hereto shall
prepare and file, and shall fully cooperate with each other party with respect
to the preparation and filing of, any Tax Returns and other filings relating to
any such Taxes or charges as may be required.
7.2. Confidentiality Covenant of the Buyer. The Confidentiality
Agreement dated January 12, 1998 as amended and modified through the date
hereof (the "Confidentiality Agreement") by and between the Buyer and Mfg. Co.
on behalf of the Company and the Sellers is hereby confirmed and acknowledged
as a continuing obligation of the parties; provided, however, that the
disclosure by the Buyer as required in connection with the Financing and any
other related offering to parties involved therewith or their representatives
who have entered appropriate confidentiality arrangements with Buyer shall not
violate such Confidentiality Agreement.
7.3. Operation of Business and Related Matters. From the date
hereof and on and prior to the Closing Date, except as otherwise permitted or
required by this Agreement, the Company will, and will cause the other Steel
Heddle Companies to, conduct the Business in the Ordinary Course of Business
and substantially as presently operated, and use reasonable efforts to maintain
the value of the Business as a going concern and preserve their relationships
with customers, suppliers, lessors, licensors, employees and others with whom
they deal. From the date hereof and on and prior to the Closing Date, no
Seller will sell, pledge or otherwise encumber any of his, her or its
Securities without the prior written consent of the Buyer. Except as set forth
in Schedule 7.3, from the date hereof and prior to the Closing Date, the
Company shall not, and shall cause the other Steel Heddle Companies not to,
without the prior written consent of the Buyer, which will not be unreasonably
withheld or delayed:
(a) enter into any transactions other than on an arms'
length basis with any Seller or any other Affiliate of the Steel
Heddle Companies (other than as contemplated by this Agreement and
transactions in the Ordinary Course of Business among the Steel Heddle
Companies); provided, however, that with the exception of transfers
aggregating no more than $100,000, no domestic Steel Heddle Company
shall transfer cash or any other assets (other than inventory or
products in the Ordinary Course of Business) to a non-domestic Steel
Heddle Company;
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(b) pay any compensation other than in the Ordinary
Course of Business or increase any compensation of any director,
officer or employee other than such increases in compensation to
non-exclusive, non-executive level employees as may be made in the
Ordinary Course of Business;
(c) incur, assume, guarantee or create any Debt
(including any capital lease), make any material loans, advances or
capital contributions to, or investments in, any other Person, or
mortgage or pledge any of their assets, or create any Liens with
respect thereto, except in the Ordinary Course of Business;
(d) amend the Charter or By-laws of any of the Steel
Heddle Companies or sell, lease or otherwise dispose of any material
assets except (i) for sales or other dispositions of inventory or
excess equipment in the Ordinary Course of Business and (ii) as may
otherwise be explicitly permitted by the terms of this Agreement;
provided, however, that the Company may file with the Commonwealth of
Pennsylvania a restated Charter that restates, but does not amend,
such Charter;
(e) make any material change in the Business or
operations of any of the Steel Heddle Companies;
(f) other than as set forth in Steel Heddle Mfg. Co.'s
capital plan for the fiscal year ending January 2, 1999, make any
capital expenditure in excess of $100,000 with respect to the Business
or enter into any contract or commitment therefor;
(g) declare, set aside or pay any dividend or
distribution with respect to its capital stock (except for any payment
to BCC ISI in accordance with the terms of the Warrants held by BCC
ISI) or redeem, purchase or otherwise acquire any of its capital
stock;
(h) split, combine or reclassify any of their
respective capital stock or issue or sell any additional shares of, or
securities convertible into or exchangeable for shares of, or options,
warrants, calls, commitments or rights of any kind to acquire shares
of, their respective capital stock;
(i) file any amended Tax Return, surrender any right to
claim a refund of Taxes, or fail to file any Tax Return or pay any
Tax, if such action would have the effect of materially increasing the
Tax liability or materially decreasing any Tax Benefit of any of the
Steel Heddle Companies, the Buyer or any Affiliate of the Buyer;
(j) change any of the accounting methods used by the
Steel Heddle Companies unless required by Generally Accepted
Accounting Principles; or
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(k) enter into any Contractual Obligation to do any of
the actions referred to in this Section 7.3.
7.4. Preparation for Closing.
7.4.1. Conditions Precedent. The Buyer on the one hand and
the Company and the Sellers on the other hand will each use
commercially reasonable efforts to bring about the fulfillment of each
of the conditions precedent to the obligations of the other set forth
in this Agreement.
7.4.2. HSR Filing. Promptly upon execution and delivery
of this Agreement, each of the Buyer and the Company will prepare and
file, or cause to be prepared and filed, with the appropriate
Governmental Authorities, a notification with respect to the
transactions contemplated by this Agreement pursuant to the HSR Act,
supply all information requested by Governmental Authorities in
connection with the HSR notification and cooperate with each other in
responding to any such request. The Buyer shall be solely responsible
for all filing fees required to be paid in connection therewith.
7.4.3. Consents, Etc. Prior to the Closing Date, the
Company shall use commercially reasonable efforts (but the Company and
the Sellers shall have no obligation to pay any fees or incur any
expenses) to secure required written consents or waivers under or with
respect to the Contracts indicated on Schedule 5.1.1, and reasonably
requested by the Buyer, any consents needed to effectuate any mergers
between the Buyer and any of the Steel Heddle Companies or between any
of the Steel Heddle Companies. If reasonably requested by the Company
in connection with its attempts to obtain such consents, the Buyer
shall execute and deliver an agreement of assignment, assumption and
attornment with respect to and/or guarantee of the obligations under
such Contracts.
7.4.4. Definitive Financing Agreements. The Buyer shall
use commercially reasonable efforts (which shall include the payment
of any financing fees reflected in the Commitment Letters) to
negotiate, prepare and enter into definitive financing agreements (the
"Definitive Financing Agreements") with the Financing Sources to
provide the financing substantially on the terms set forth in the
Commitment Letters (the "Financing") and otherwise to use reasonable
commercial efforts to enforce the financing commitments reflected in
the Commitment Letters; provided, however, that Buyer need not enforce
the commitment of DLJ Bridge Finance, Inc. dated April 28, 1998 to
provide bridge financing until June 26, 1998. The Buyer shall use
commercially reasonable efforts to satisfy on or before the Closing
Date all requirements of the Definitive Financing Agreements which are
conditions to closing the transactions constituting the Financing.
The Buyer shall promptly notify the Sellers of any material change to,
or revocation of, any Commitment Letter.
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7.4.5. Representations and Warranties. Each party hereto
shall use commercially reasonable efforts not to take any action or
omit to take any action that will cause any representation or warranty
of such party to become untrue in any material respect if it were made
on any date from the date hereof until Closing.
7.5. Potential Parachute Payments. Buyer and Sellers acknowledge
that a portion of the payments referred to in clause (b) of Section 1.2.30
above might be deemed to constitute "excess parachute payments" under Code
Section 280G(b). As soon as reasonably practicable, the Company will (i)
identify which, if any, of such payments may reasonably be deemed to constitute
an excess parachute payment (the payments so identified being the "Potential
Parachute Payments") and (ii) request that each Seller that would receive a
Potential Parachute Payment agree in writing to waive such Seller's rights to
receive such payment and to accept in substitution therefor the right to
receive such payment only if approved by stockholders in a manner intended to
comply with Code Section 280G(b)(5)(B) and proposed Treasury Regulation Section
1.280G-1 Q&A 7 (it is being understood that such waiver will not be requested
if the Potential Parachute Payment is already conditional on such approval).
The Company will use commercially reasonable efforts to obtain each such
waiver. The Company will seek, as soon thereafter as reasonably practicable,
stockholder approval in a manner intended to comply with Code Section
280G(b)(5)(B) and proposed Treasury Regulation Section 1.280G-1 Q&A 7 of all
Potential Parachute Payments that have been conditioned on the receipt of such
approval. The determination of which Tax Benefit Payments are Potential
Parachute Payments, the form of each such waiver and the disclosure and other
circumstances of any such stockholder approval shall be subject to the approval
of Buyer, which approval shall not be unreasonably withheld or delayed.
7.6. Letter of Credit. The Company, the Sellers and the Buyer
shall cooperate to permit the substitution, as of the Closing, of a new letter
of credit provided by the Buyer's Financing Sources for the SCDHEC Letter of
Credit.
7.7. No Section 338 Election. The Buyer will not make an election
pursuant to Section 338 of the Code with respect to the Company and its
Subsidiaries.
7.8. Further Assurances. Each party, upon the request from time to
time of any other party hereto after the Closing, and at the expense of the
requesting party but without further consideration, will do each and every act
and thing as may be necessary or reasonably requested to consummate the
transactions contemplated hereby in an orderly fashion.
7.9. Delivery of Interim Financial Statements. Prior to the
Closing, the Company shall use commercially reasonable efforts to promptly
deliver to the Buyer interim financial statements generated in the Ordinary
Course of Business (the "Interim Financial Statements"). All Interim Financial
Statements delivered pursuant to this Section 7.9 shall be prepared in a manner
consistent with past practice.
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7.10. No Solicitation. From and after the date of this Agreement
until the earlier of (a) the Closing or (b) the termination of this Agreement
pursuant to Section 13.1, neither the Steel Heddle Companies nor the Sellers
shall, and shall not permit any officer, director, agent, representative or
Affiliate of the Sellers or the Steel Heddle Companies (including ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co.) to, directly or indirectly: (i) enter into any written or oral
agreement or understanding with any Person (other than the Buyer or its
Affiliates) regarding Another Transaction (as defined below); (ii) enter into
or continue any negotiations or discussions with any Person (other than the
Buyer or its Affiliates) regarding the possibility of Another Transaction;
(iii) submit, solicit, initiate, encourage, participate in, or facilitate any
proposal or offer (other than a proposal or offer of the Buyer of its
Affiliates) regarding Another Transaction; or (iv) except as otherwise required
by law, provide any Confidential Information (including this Agreement and any
other materials containing the Buyer's acquisition proposal and any other
financial information, projections or proposals regarding the Steel Heddle
Companies) to any Person (other than the Buyer or its Affiliates or their
respective representatives) whom the Steel Heddle Companies know, or have
reason to believe, would have any interest in participating in Another
Transaction. As used herein, the term "Another Transaction" means the sale of
any of the material assets of any of the Steel Heddle Companies (other than the
sale of inventory in the Ordinary Course of Business) or any sale, merger,
consolidation, public offering, reorganization, dissolution, recapitalization,
business combination or similar transaction involving any of the Steel Heddle
Companies or any of their respective capital stock (or rights to acquire such
capital stock). The Company shall notify the Buyer immediately if on or after
the date of this Agreement any third party makes any written proposal, offer,
inquiry or contact in respect of Another Transaction.
7.11. Confidentiality. After the Closing, each Seller will use
commercially reasonable efforts to treat and hold as such all Confidential
Information and refrain from using any Confidential Information except in
connection with this Agreement. In the event that such Seller is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand or similar
process) to disclose any Confidential Information, such Seller will notify the
Buyer promptly of the request or requirement so that the Buyer may seek an
appropriate protective order or waive compliance with the provisions of this
Section 7.11. If, in the absence of a protective order or the receipt of a
waiver hereunder, such Seller is, on the advice of counsel, compelled to
disclose any Confidential Information or else stand liable for contempt, such
Seller may so disclose the Confidential Information; provided, however, that
such Seller shall use its commercially reasonable efforts to obtain, at the
request and expense of the Buyer, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information
required to be disclosed as the Buyer shall designate.
7.12. Covenant Not to Compete; Non-Solicitation.
(a) ▇▇▇▇▇▇ and each BCC Seller agrees that for a period of three
(3) years from and after the Closing Date (the "Non-Compete Period"), such
party and its successors and Affiliates will not engage directly or indirectly
in the Business in any geographic area in which any Steel
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Heddle Company conducts the Business as of the Closing Date; provided, however,
that nothing herein shall prohibit ▇▇▇▇▇▇ or such BCC Seller and its successors
and Affiliates from being a passive owner of not more than 5% of the
outstanding stock of any class of any other corporation that engages in the
Business, so long as such party has no active participation in the business of
such corporation.
(b) During the Non-Compete Period, neither ▇▇▇▇▇▇ nor any BCC
Seller or any successor or Affiliate thereof shall directly or indirectly
through another entity, (i) induce or attempt to induce any employee as of the
date hereof of the Buyer or any Steel Heddle Company to leave the employ of the
Buyer or such Steel Heddle Company, or in any way interfere with the
relationship between the Buyer or such Steel Heddle Company and any employee
thereof as of the date hereof, or (ii) hire any of the employees of any Steel
Heddle Company listed in Schedule 7.12.
(c) If, at the time of enforcement of this Section 7.12, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by applicable law. ▇▇▇▇▇▇ and each BCC Seller
agrees that the restrictions contained in this Section 7.12 are reasonable.
(d) In the event of the breach or a threatened breach by ▇▇▇▇▇▇, a
BCC Seller or any successor or Affiliate thereof any of the provisions of this
Section 7.12, in addition and supplementary to other rights and remedies
existing in its favor, the Buyer may apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violations of the provisions hereof
(without posting a bond or other security). In addition, in the event of an
alleged breach or violation of this Section 7.12 by ▇▇▇▇▇▇, a BCC Seller or any
successor or Affiliate thereof, the Non-Compete Period shall be tolled until
such breach or violation has been duly cured.
7.13. Litigation Support. In the event and for so long as any party
hereto actively is contesting or defending against any Action from a third
party in connection with (i) any transaction contemplated under this Agreement
or (ii) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or
transaction on or prior to the Closing Date involving the Company, the other
party will cooperate with the contesting or defending party and its counsel in
the contest or defense, make available its personnel, and provide such
testimony and access to its books and records as shall be reasonably necessary
in connection with the contest or defense, all at the sole cost and expense of
the contesting or defending party (unless the contesting or defending party is
entitled to indemnification therefor under Section 11 hereof).
7.14. Debt. The Company shall use reasonable commercial efforts to
arrange for the delivery to the Buyer of appropriate payoff letters and
instructions reasonably satisfactory to the
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Buyer for the repayment of all outstanding Debt and the release of all Liens
securing (including appropriate UCC termination statements) and the
cancellation of all notes issued in connection with such Debt.
7.15. Expenses. The Company shall use reasonable commercial efforts
to provide the Buyer at or before Closing with appropriate bills and payment
instructions reasonably satisfactory to the Buyer for all Unpaid Expenses.
7.16. Accountant's Consent. The Company shall use its commercially
reasonable efforts to obtain, at the Buyer's expense, the consent of Ernst &
Young LLP to the inclusion of the Financial Statements, together with its
unqualified audit opinions on each of such statements, in the offering
memorandum used by the Buyer in connection with the Financing, the registration
statement used in connection with the subsequent exchange offer and any other
related registered offering.
7.17. Discharge of Management Loans. The loans by the Company to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, respectively, evidenced by Notes dated
as of April 29,1994, shall be discharged by the maker thereof on or prior to
the Closing Date. Each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ hereby
authorizes the Buyer to pay to the Company, on his behalf, out of the portion
of the Cash Consideration otherwise payable to him, all amounts required as of
the Closing to discharge such loans.
7.18. Exercise of Options, Rights and Warrants. Each Seller agrees
that such Seller will not exercise any Options, Rights or Warrants held by such
Seller prior to the Closing.
8. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE BUYER. The obligations
of the Buyer to consummate the Closing under this Agreement are subject to the
satisfaction, at or prior to the Closing, of all of the following conditions,
compliance with which, or the occurrence of which, may be waived prior to the
Closing in writing by the Buyer in its sole discretion:
8.1. Representations, Warranties and Covenants.
8.1.1. Continued Accuracy of Representations and
Warranties. The representations and warranties of the Sellers and the
Company contained in this Agreement shall be true and correct in all
material respects on, and as of, the Closing Date with the same effect
as though such representations and warranties had been made on and as
of such date (except for representations and warranties that speak as
of a specific date or time other than the Closing Date which need only
be true and correct as of such date or time).
8.1.2. Performance of Agreements. The Sellers and the
Company shall have performed and satisfied, in all material respects,
all covenants and agreements required by this Agreement to be
performed or satisfied by them at or prior to the Closing.
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8.1.3. Sellers' Closing Certificate. At the Closing, the
Sellers shall furnish a certificate, signed by each of the Sellers,
dated the Closing Date, to the effect that the conditions specified in
Sections 8.1.1 and 8.1.2 hereof (to the extent relating to such
Seller), have been satisfied.
8.1.4. Company's Closing Certificate. At the Closing, the
Company shall furnish a certificate, signed by the President or a Vice
President of the Company, dated the Closing Date, to the effect that
the conditions specified in Sections 8.1.1 and 8.1.2 (to the extent
relating to the Company), have been satisfied.
8.1.5. Outstanding Capital. The Shares shall constitute
all the outstanding stock of the Company and the Options, Warrants and
Rights shall constitute all the Contractual Obligations pursuant to
which the Company has granted any option, warrant or other right to
any Person to acquire the shares of Common Stock or any other
securities of, or equity interest in, the Company.
8.2. Legality; Governmental Authorization; Litigation. The
acquisition of the Securities and the consummation of the other transactions
contemplated hereby shall not be prohibited by any Legal Requirement, and all
necessary filings, if any, pursuant to the HSR Act shall have been made and all
applicable waiting periods thereunder (and any extensions thereof) shall have
expired or been terminated. No Action shall have been instituted at or prior
to the Closing by any Person or Governmental Authority, other than a party
hereto or any Affiliate thereof, relating to this Agreement or any of the
transactions contemplated hereby, which has a reasonable likelihood of success
and the result of which would prevent or make illegal the consummation of any
such transaction or could otherwise reasonably be expected to have a material
adverse effect on the ability of the Buyer to consummate the transactions
contemplated hereby.
8.3. Third-Party Consents. There shall have been obtained by the
Company the consents or waivers listed on Schedule 8.3.
8.4. Opinion of Counsel. The Sellers and the Company shall have
furnished the Buyer with favorable opinions of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇▇, L.L.P.; Ropes & ▇▇▇▇; and Drinker, ▇▇▇▇▇▇ & ▇▇▇▇▇ (or in each case
other counsel satisfactory to the Buyer ), each dated as of the Closing Date,
with respect to the matters set forth in Exhibit 8.4.
8.5. Financing. The Definitive Financing Agreements shall be in
full force and effect and all conditions for the receipt by the Buyer of the
Financing contemplated thereby shall have been satisfied or waived.
8.6. General. All corporate proceedings required to be taken on
the part of the Company in connection with the transactions contemplated by
this Agreement shall have been taken. The Buyer shall have received copies of
such officers' certificates, good standing
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certificates, incumbency certificates and other customary closing documents as
the Buyer may reasonably request in connection with the transactions
contemplated hereby.
8.7. Title Insurance. First American Title Insurance Company,
Chicago Title Insurance Company, and/or another nationally recognized
independent title insurance company or companies mutually agreed upon by the
Buyer and the Sellers' Representative (the "Title Companies"), shall be willing
to insure the Company's or the applicable Subsidiaries' marketable title in and
to the Owned Real Property, and Buyer's lender's mortgage lien on the Owned
Real Property, free and clear of all Liens, other than the matters disclosed on
Schedule 5.5.2(a) and other than Liens that in the aggregate do not materially
diminish the value of the Real Property or materially limit its current or
intended use in the Business. The Company shall provide such usual and
customary affidavits as the Title Companies reasonably shall require in order
to issue such title insurance policy.
8.8. Surveys. Buyer shall have received (after using commercially
reasonable efforts to obtain, at its own expense) a survey of each Owned Real
Property conforming to the Minimum Standard Detail Requirements jointly
established and approved in 1992 by ALTA and ACSM certified to the Company, the
Buyer's lender and the Title Companies showing no defects, encroachments or
encumbrances other than those disclosed on Schedule 5.5.2(a) or which in the
aggregate do not materially diminish the value of the Real Property or
materially limit its current or intended use in the Business.
9. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE SELLERS. The obligations
of the Sellers to consummate the Closing under this Agreement are subject to
the satisfaction, at or prior to the Closing, of all of the following
conditions, compliance with which, or the occurrence of which, may be waived
prior to the Closing in writing by the Sellers' Representative in its sole
discretion:
9.1. Representations, Warranties and Covenants.
9.1.1. Continued Accuracy of Representations and
Warranties. The representations and warranties of Buyer contained in
this Agreement shall be true and correct on and as of the Closing Date
with the same effect as though such representations and warranties had
been made on and as of such date (except for representations and
warranties that speak as of a specific date or time other than the
Closing Date which need only be true and correct as of such date or
time).
9.1.2. Performance of Agreements. The Buyer shall have
performed and satisfied, in all material respects, all covenants and
agreements required by this Agreement to be performed or satisfied by
the Buyer at or prior to the Closing.
9.1.3. Officer's Certificate. At the Closing, the Buyer
shall furnish to the Sellers a certificate signed by the President or
any Vice President of the Buyer, dated the
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Closing Date, to the effect that the conditions specified in Sections
9.1.1 and 9.1.2 have been satisfied.
9.2. Legality; Government Authorization; Litigation. The Sellers'
consummation of the transactions contemplated hereby shall not be prohibited by
any Legal Requirement, and all necessary filings, if any, pursuant to the HSR
Act shall have been made and all applicable waiting periods thereunder shall
have expired or been terminated. No Action shall have been instituted at or
prior to the Closing by any Person or Governmental Authority, other than a
party hereto or any Affiliate thereof, relating to this Agreement or any of the
transactions contemplated hereby, which has a reasonable likelihood of success
and the result of which would prevent or make illegal the consummation any such
transaction or could otherwise reasonably be expected to have a Material
Adverse Effect on the ability of the Sellers to consummate the transactions
contemplated hereby.
9.3. Opinion of Counsel. The Buyer shall have furnished the
Sellers with a favorable opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, dated as of the Closing
Date, with respect to the matters set forth in Exhibit 9.3.
9.4. General. All corporate proceedings required to be taken by
the Buyer in connection with the transactions contemplated by this Agreement
shall have been taken. The Sellers shall have received copies of such
officers' certificates, good standing certificates, incumbency certificates and
other customary closing documents as the Sellers may reasonably request in
connection with the transactions contemplated hereby.
10. EMPLOYMENT AND EMPLOYEE BENEFITS ARRANGEMENTS.
10.1. Employment of Affected Employees. The Buyer shall cause the
Steel Heddle Companies to employ on the Closing Date, at not less than the same
rate of pay as in effect immediately preceding the Closing Date, all Affected
Employees.
10.2. Continuation of Employee Benefits. Buyer represents and
warrants that it is its present intention to have the employee benefits offered
employees of the Steel Heddle Companies existing immediately preceding the
Closing Date, including those included within the Company Plans listed on
Schedule 5.12, continue without change after the Closing Date.
10.3. WARN. The Buyer shall indemnify the Sellers and their
Affiliates and defend and hold each of them harmless from and against any
Losses which may be incurred by any of them under WARN, or any state plant
closing or notification law or otherwise, arising out of, or relating to, any
actions taken by the Buyer or the Company on or after the Closing Date.
10.4. Third-Party Rights. No provision of this Section 10 shall
confer any rights or remedies upon any Person not a party hereto, including
any employee or former employee (including any beneficiary or dependent
thereof) of the Company or any Subsidiaries of the
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Company including in respect of continued employment (or resumed employment)
for any specified period of any nature or kind whatsoever.
11. INDEMNIFICATION.
11.1. Indemnification. Subject to the terms of this Section 11,
each of the Sellers (each in its capacity as an indemnifying party, an
"Indemnifying Party") agrees after the Closing to indemnify the Buyer and the
Company (in their capacities as indemnified parties, together, the
"Indemnitee") and hold the Buyer harmless, and the Buyer and the Company (in
their capacities as indemnifying parties, an "Indemnifying Party") agree after
the Closing to indemnify each of the Sellers (each in its capacity as
indemnified party, an "Indemnitee") and hold each of the Sellers harmless,
from, against and in respect of any and all Losses arising from or related to
any of the following:
11.1.1. The Sellers. In the case of each Seller as an
Indemnifying Party (i) any breach of any representation or warranty
made by such Seller in this Agreement or in any certificate required
to be delivered under this Agreement; (ii) any breach of any
representation or warranty (except with respect to capitalization in
Section 5.1.3 and the penultimate sentence of Section 5.1.4) made by
the Company in this Agreement or in any certificate required to be
delivered under this Agreement; (iii) any breach or violation of any
covenant or agreement made by such Seller in this Agreement; (iv) any
breach of any representation or warranty with respect to
capitalization in Section 5.1.3 or the penultimate sentence of Section
5.1.4 made by the Company in this Agreement; (v) any breach or
violation of any covenant or agreement made by the Company in this
Agreement to be performed prior to Closing and (vi) any Unpaid
Expenses not subtracted from the calculation of Purchase Price
pursuant to Section 3.1; provided, however, that for purposes of
clauses (i) and (ii), each qualification as to materiality or Material
Adverse Effect in the representations and warranties referred to
therein shall be ignored; and provided, further, that for purposes of
clauses (i) and (ii) only, no representation, warranty, agreement or
covenant referred to therein shall be considered to be breached in
respect of any single item or event, or series of related items or
events, unless the Losses attributable to such single item or event,
or series of related items or events, exceed $250,000 in the
aggregate. For purpose of this Section 11, all notices to the Sellers
as Indemnifying Parties, or otherwise, shall be delivered to the
Sellers' Representative.
11.1.2. The Buyer. In the case of the Buyer or the Company
as Indemnifying Party (i) any breach of any representation or warranty
made by or on behalf of the Buyer in this Agreement or any certificate
required to be delivered under this Agreement; and (ii) any breach or
violation of any covenant or agreement made by or on behalf of the
Buyer in this Agreement.
11.2. Survival. Each representation and warranty contained in this
Agreement or any certificate required to be delivered under this Agreement
(other than representations and
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warranties with respect to ownership of securities in Section 4.4 or
capitalization in Section 5.1.3 and the penultimate sentence of Section 5.1.4,
which shall survive forever, and representations and warranties with respect to
tax matters in Section 5.11, which shall expire upon the expiration of the
applicable statute of limitations) shall survive the Closing until, and shall
expire on, March 15, 1999, without regard to any investigation made by any
party hereto. Notwithstanding the preceding sentence, with respect to any
claim asserted by a party for a breach of any warranty of the other party
before March 15, 1999 in the manner and with the specificity required under
Section 11.4, then the warranty with respect to which the claim is asserted
shall survive beyond the date determined by the preceding sentence, but such
survival shall extend only with respect to such claim and the specific grounds
asserted with respect thereto in such notice.
11.3. Monetary Limitations on Indemnification. The Sellers as
Indemnifying Parties shall not have any obligation to indemnify the Buyer or
the Company as Indemnitee under clauses (i) and (ii) of Section 11.1.1 unless
and until the aggregate cumulative total of all Losses for which
indemnification would be provided under Section 11.1.1 incurred by the Buyer or
the Company as Indemnitee exceeds $1,000,000, whereupon the Indemnitee shall be
entitled to indemnification for such Losses but only to the extent that the
aggregate cumulative total of such Losses exceeds such amount.
Notwithstanding any other provision of this Agreement, (i) the total maximum
aggregate indemnification liability for all claims for all such Losses in
excess of $1,000,000 pursuant to clauses (i), (ii) and (v) of Section 11.1.1.
shall not exceed $5,000,000 (the "Maximum Aggregate Loss") for all Sellers as a
group; and (ii) each Seller's aggregate indemnification obligations under
clauses (ii) and (v) of Section 11.1.1 shall be limited to such Seller's
Proportionate Share of the Maximum Aggregate Loss, (iii) each Seller's
aggregate indemnification obligation under clauses (ii) and (v) of Section
11.1.1 for any specific Loss shall be limited to such Seller's Proportionate
Share of such Loss, and (iv) except for indemnification obligations for claims
for breaches of the representations in Section 5.1.3 or the penultimate
sentence of Section 5.1.4, each Seller's aggregate obligation under this
Section 11 shall in no event exceed the portion of the Cash Consideration
received by such Seller.
11.4. Third-Party Claims, Etc. Promptly after (a) becoming aware of
any fact, occurrence or event which may give rise to a claim for
indemnification under this Section 11 or (b) the receipt by any Indemnitee of
notice of the commencement of any action or other claim against such Indemnitee
by a third party, such Indemnitee shall, if a claim with respect thereto is or
may be made against any Indemnifying Party pursuant to this Section 11, give
such Indemnifying Party written notice of the nature and basis of such claim.
The Indemnifying Parties shall have the right to defend such claim, at the
Indemnifying Parties' expense and with counsel of their choice reasonably
satisfactory to the Indemnitee; provided, however, that (a) the Indemnifying
Parties so notify the Indemnitee within thirty (30) days after receipt of such
notice, (b) the claim seeks only monetary relief, (c) the claim is not made by
a Governmental Authority alleging criminal violations, and (d) the Indemnifying
Party would be responsible (after the effect of Section 11.3) for at least
one-half of the amount of any reasonably likely damages in the event the
plaintiff's claims as to liability were resolved in its favor; and provided,
further, that the Indemnitee may at any time consent to the entry of a judgment
or enter into a settlement with
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respect to any claim if the terms of such judgment or settlement contain an
unconditional release of the Indemnitee from all liability in respect of such
claim and the Indemnitee would be responsible (after the effect of Section
11.3) for at least one-half of the amount of the Losses attributable to such
judgment or settlement. So long as the Indemnifying Parties are conducting the
defense of such claim as provided in the immediately preceding sentence, the
Indemnitee may retain separate co-counsel at its sole cost and expense and may
participate in the defense of such claim, and the Indemnifying Parties will not
consent to the entry of any judgment or enter into any settlement with respect
to such claim unless (a) such judgment or settlement contains an unconditional
term providing for a release to be given by the claimant in question or
plaintiff to the Indemnitee of and from all liability in respect of such claim
and (b) the Indemnifying Party would be responsible (after the effect of
Section 11.3) for at least one-half of the amount of the Losses attributable to
such judgment or settlement. In the event the Indemnifying Parties do not
assume the defense of such claim as so provided, (x) the Indemnitee shall
defend against such claim (provided that the Indemnitee shall not settle or
consent to judgment in respect of such claim without the consent of the
Indemnifying Party (which consent shall not be unreasonably withheld or
delayed) unless (a) the terms of such judgment or settlement contain an
unconditional release of the Indemnitee from all liability in respect of such
claim and (b) the Indemnitee would be responsible (after the effect of Section
11.3) for at least one-half of the amount of the Losses attributable to such
judgment or settlement), and (y) the Indemnifying Parties will remain
responsible for any Losses the Indemnitee may suffer as a result of such claim
to the full extent provided in this Section 11. Regardless of which party
shall assume the defense of such claim, each party shall upon request provide
to the other parties all information and documentation, and reasonable access
to all personnel, in their possession or under their control which are
reasonably required to assist in the defense of such claim.
11.5. Mineral Spirits Remediation at Westminster, S.C. Facility.
11.5.1. Agreement With Respect to Mineral Spirits Releases.
This Section 11.5 sets forth the agreement of the parties with respect
to any releases relating to or arising from the virgin mineral spirits
storage tank and related former underground piping system used to
store and transfer mineral spirits at the Company's Westminster, S.C.
facility, including any offsite migration of contaminants relating to
or arising from such releases (and including any contamination
detected in the analytical results from the sampling conducted at the
Westminster, South Carolina facility on April 28, 1998) (the "Mineral
Spirits Releases"). Subject to the terms and conditions set forth in
this section, the Sellers shall indemnify and hold the Buyer and the
Steel Heddle Companies harmless, from, against and in respect of any
Losses relating to or arising from any Mineral Spirits Releases,
including any fines or penalties, third-party claims, and any
investigation, remediation, and corrective action costs, and any
natural resources damages (the "Mineral Spirits Losses"). Without
limiting the generality of the foregoing, the Sellers shall also
initiate, conduct, and complete any investigations, remediation,
corrective action, or compliance action in order to address the
Mineral Spirits Releases to the satisfaction of the South Carolina
Department of Health and Environmental Control ("SCDHEC") and any
other relevant Governmental Authority
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("Mineral Spirits Remediation"), subject to the terms and conditions
set forth in this Section 11.5.
11.5.2. Environmental Escrow; Limitation of Seller's
Responsibility. On or prior to the Closing Date, the parties shall
enter into the Environmental Escrow Agreement substantially in the
form set forth in Exhibit 11.5.2 (the "Environmental Escrow
Agreement"). In accordance with the Environmental Escrow Agreement,
the Buyer shall deliver to the escrow agent under such agreement (the
"Escrow Agent") $350,000, which shall constitute a portion of the
Purchase Price to pay for any Mineral Spirits Losses, including the
costs of any Mineral Spirits Remediation. The $350,000 delivered
pursuant to the Environmental Escrow Agreement, as increased or
decreased in accordance with the terms of this Section 11.5 and the
Environmental Escrow Agreement, shall be referred to as the "Escrow
Amount". The following shall be paid out of the Escrow Amount, in
accordance with the terms of this Section 11.5 and the Environmental
Escrow Agreement: (i) Mineral Spirits Losses incurred by the Buyer or
any Steel Heddle Company; (ii) reasonable costs incurred by Sellers as
a result of the Sellers' Representative's conduct of the Mineral
Spirits Remediation; (iii) reasonable costs incurred by the Buyer or
any Steel Heddle Company as a result of the Buyer or any Steel Heddle
Company taking reasonable action to respond to an actual or threatened
emergency or imminent endangerment situation arising from the Mineral
Spirits Releases; and (iv) reasonable costs incurred by the Buyer or
any Steel Heddle Company as a result of their assumption of management
and control of the conduct of the Mineral Spirits Remediation, as a
result of Sellers' Representative's failure to manage the Mineral
Spirits Remediation in accordance with the standards and requirements
contained herein. Notwithstanding any other provision of this Section
11.5, the Sellers' responsibility to indemnify the Buyer and the
Company for any Mineral Spirits Losses and the Sellers' responsibility
for any Mineral Spirits Remediation, shall be limited to the Escrow
Amount.
11.5.3. Mineral Spirits Remediation. Prior to the Closing
Date, the Sellers' Representative shall conduct a Phase II
environmental investigation at the Westminster, S.C. facility to
determine the presence of any environmental contamination arising from
or relating to any Mineral Spirits Releases. Should the investigation
detect any environmental contamination in quantities or concentrations
that exceed any applicable action levels or cleanup levels established
or utilized by, or that would require investigation, remediation or
monitoring under the applicable rules or regulations of, SCDHEC and
any other applicable Governmental Authority, the Sellers'
Representative shall initiate, conduct, and complete, in accordance
with a work plan (the "Work Plan") approved by SCDHEC and any other
relevant Governmental Authority (and not conditioned on any material
restriction on the ownership or use of the Westminster, S.C. facility
(such as institutional controls or use controls) other than that the
facility continue to be used for industrial purposes)), the Active
Remediation Phase (as defined below) of the Mineral Spirits
Remediation. For purposes of this Section 11.5, the "Active
Remediation Phase" shall consist of all aspects of the Mineral Spirits
Remediation through and including implementation and completion of all
one-time remediation measures (such as soil removal) contemplated by
the Work Plan and, if ongoing
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remediation measures (such as ground water pumping, treatment or
monitoring) are contemplated by the Work Plan, installation of the
▇▇▇▇▇ or other remediation systems, materials or equipment necessary
for such ongoing remediation, and operation for a period of three
months after installation of any such ▇▇▇▇▇, systems, materials or
equipment. By way of clarification, the following, to the extent
required for or contemplated by the Work Plan, are included in the
Active Remediation Phase: any pre-remedial sampling or other
investigation to determine the nature of or delineate the extent of
contamination, including an investigation work plan; the design of
remedial measures or a remedial system, including a remediation work
plan; any one-time removal actions, including excavation, removal,
treatment or disposal of soil; the one-time construction and
installation of the remedial system; obtaining any environmental
permits required for operation of the such remedial system; and
preparation, installation and operation for a three-month period of
any such remedial system and any groundwater monitoring program. The
"Operation and Maintenance Phase" shall consist of all aspects of the
Mineral Spirits Remediation from and after the Active Remediation
Phase.
11.5.4. Cooperation; Conduct of Mineral Spirits
Remediation. The parties agree to reasonably cooperate with one
another in connection with the Mineral Spirits Remediation. Until
termination of the Environmental Escrow, the Sellers shall manage and
control the conduct of the Mineral Spirits Remediation, provided that
notwithstanding anything to the contrary contained herein, the Buyer
or the Company may take such action as is reasonable under the
circumstances, and without prejudice to its rights hereunder, to
respond to an actual or threatened emergency or imminent endangerment
situation arising from the Mineral Spirits Releases and the reasonable
costs associated with such action shall be paid out of the Escrow
Amount, in accordance with the terms of the Environmental Escrow
Agreement. In order to conduct the Mineral Spirits Remediation,
Sellers' Representative shall retain ▇▇▇▇▇▇ & Callcott Engineers,
Inc., or another environmental consulting firm that is reasonably
acceptable to the Buyer. Upon reasonable advance request, the Buyer
and the Company shall afford the Sellers' Representative and its
environmental consultant reasonable access to the Westminster, S.C.
facility for the purpose of allowing them to conduct and complete the
Mineral Spirits Remediation. Sellers' Representative shall conduct
the Mineral Spirits Remediation in a manner that does not unreasonably
interfere with the day-to-day operations at the Westminster, S.C.
facility. The Sellers' Representative shall manage the Mineral
Spirits Remediation in good faith and in a responsible manner, and all
activities in connection therewith shall be undertaken promptly and
completed expeditiously using commercially reasonable efforts, subject
to any schedules and approvals required by SCDHEC or any other
applicable Governmental Authority. Should the Sellers' Representative
fail to conduct the Mineral Spirits Remediation in accordance with the
standards and requirements contained herein, the Buyer or the Company
may assume management and control of the Mineral Spirits Remediation,
and the reasonable costs of the Buyer or the Company, as the case may
be, shall be paid out of the Escrow Amount in accordance with the
terms of the Environmental Escrow Agreement. The Sellers'
Representative shall promptly restore to its prior condition (to the
extent commercially feasible) any property that is disturbed or
disrupted as a result of any activities it conducts
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in connection with the Mineral Spirits Remediation. The Sellers shall
indemnify and hold the Buyer and the Steel Heddle Companies harmless,
from, against and in respect of any Losses relating to or arising from
the negligence or willful misconduct of Sellers, Sellers'
Representative, its environmental consultant, any of their agents,
employees, representatives, or contractors in connection with the
Mineral Spirits Remediation. Such Losses shall be paid directly by
Sellers, and shall not be paid out of the Escrow Amount. The Sellers'
Representative shall keep the Buyer and the Company apprised of
developments relating to the Mineral Spirits Remediation and the Buyer
and the Company shall be entitled, at their sole cost and expense, to
reasonably participate in the Mineral Spirits Remediation. Such
participation shall include, without limitation: (i) the right to
receive and comment on draft copies of reports, workplans and
analytical data submitted to any Governmental Body, and the right to
have such comments reasonably addressed, (ii) the right to receive
final copies of such reports, workplans, and data, (iii) the right to
receive copies of all notices, letters or documents received from any
Governmental Body or third party, (iv) the right to receive advance
notices of any material meetings with any Governmental Body and the
opportunity to attend (but without substantive participation) such
meetings; and (v) the right to receive advance notice of and to
comment on all material actions by the Sellers' Representative and the
right to have such comments addressed.
11.5.5. SCDHEC Oversight and Approval. Sellers'
Representative shall use commercially reasonable efforts to obtain
prior written approval of SCDHEC regarding any work Sellers'
Representative proposes to conduct in connection with the Mineral
Spirits Remediation. Should such written approval be unavailable,
Sellers' Representative shall use commercially reasonable efforts to
obtain prior oral approval from an appropriate SCDHEC representative
regarding any such work. Sellers' Representative shall keep SCDHEC
reasonably apprised of activities and results related to the Mineral
Spirits Remediation and shall submit the results of its field work to
SCDHEC for its review. Sellers' Representative shall communicate and
meet with SCDHEC as necessary or appropriate to help ensure that
SCDHEC approves of work conducted in connection with the Mineral
Spirits Remediation.
11.5.6. Termination of Environmental Escrow. Unless
terminated in an Early Termination (as defined below), the Sellers'
responsibilities to Buyer and the Company under this Section 11.5 with
respect to the Mineral Spirits Releases shall terminate (a "Scheduled
Termination"), subject to any payments to be made pursuant to Section
11.5.7, when: (i) any fines, penalties, damages or claims asserted or
received through such date and relating to or arising from the Mineral
Spirits Releases, if any, have been paid, settled, or resolved; (ii)
the Active Remediation Phase has been completed; and (iii) all costs
and expenses associated with the Active Remediation Phase have been
paid. In addition, the Sellers' Representative may, no sooner than
one year after the Closing Date, submit a petition to Buyer for
termination (an "Early Termination") prior to such date of the
Sellers' responsibilities to Buyer and the Company under this Section
11.5 with respect to the Mineral Spirits Releases. Sellers'
Representative shall be permitted to obtain an Early Termination if:
(iv) any fines, penalties, damages or claims incurred or received
through such date and relating to or arising from the Mineral Spirits
Releases, if any, have been paid, settled, or resolved; (v) the
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Remediation Completion Costs (as defined below) are reasonably certain
and estimable; (vii) Sellers' Representative have delivered to the
Buyer and the Company a good faith estimate of the Remediation
Completion Costs; and (ix) such good faith estimate is reasonably
acceptable to Buyer. Upon a Scheduled Termination or an Early
Termination, the Escrow Agreement shall terminate, subject only to the
payments to be made pursuant to Section 11.5.7.
11.5.7. Payments Upon Termination. Upon the termination of
the Environmental Escrow Agreement as provided in Section 11.5.6, the
Escrow Agent shall pay to the Buyer the amount of the Remediation
Completion Costs, and, after such payment to the Buyer the
Environmental Escrow Agent shall pay any remaining amount to the
Sellers' Representative in accordance with the Escrow Agreement. For
purposes of this Section 11.5, the "Remediation Completion Costs"
shall mean, at any time, the estimated costs from such date to
complete the Active Remediation Phase (if not already completed) and
the Operation and Maintenance Phase. In determining the Remediation
Completion Costs, there shall be included an appropriate contingency
amount for uncertainties, and the amount of future costs shall be
determined on a present value basis using a discount rate of twelve
percent (12.0%). The amount of the Remediation Completion Costs shall
be determined by agreement between the Buyer and the Sellers'
Representative or, failing such agreement by binding arbitration as
provided in Section 11.5.9; provided, however, that for purposes of an
Early Termination the amount of the Remediation Completion Costs shall
be determined by agreement between the Buyer and the Sellers'
Representative.
11.5.8. Reduction in Escrow Amount. Upon the approval by
SCDHEC and any other relevant Governmental Authority of the Work Plan,
if the Escrow Amount exceeds the sum of any unpaid fines, penalties,
damages or claims asserted or received through such date and relating
to or arising from the Mineral Spirits Releases plus 150% of the
Remediation Completion Costs, the Sellers shall be entitled to reduce
the Escrow Amount by such the amount of such excess. Any such excess
shall be paid to the Sellers' Representative in accordance with the
Environmental Escrow Agreement.
11.5.9. Disputes; Arbitration. All claims, controversies,
and other matters related to Mineral Spirits Losses, including the
Mineral Spirits Remediation, and interpretation of the requirements
set forth in this Section 11.5, shall be finally resolved through
binding arbitration in South Carolina under the Commercial Arbitration
Rules of the American Arbitration Association, as modified by this
Section 11.5.9. The arbitral tribunal shall consist of a single
arbitrator, who shall be an environmental consultant, environmental
lawyer, or other environmental professional knowledgeable and
experienced regarding SCDHEC remediation requirements and the
investigation and remediation of contamination in South Carolina.
Judgment on the award of the arbitrator may be entered in any court
having jurisdiction thereof or having jurisdiction over one or more of
the parties or their assets. The arbitrator shall allocate the costs
of the arbitration, including reasonable attorney's fees, to the
parties in an equitable manner, taking into account the relative
merits
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of the parties' respective positions. Unless otherwise agreed by the
Buyer and the Sellers' Representative, such costs shall not be paid
out of the Escrow Amount.
11.6. Special ▇▇▇▇▇ Indemnity. Subject to the terms of this Section
11.6, each of the Sellers jointly and severally agrees to indemnify the Buyer
and the Company and hold the Buyer and the Company harmless from, against and
in respect of any and all Losses arising from or related to the claim of ▇▇▇▇▇▇
▇. ▇▇▇▇▇ described on Schedule 5.9 (the "▇▇▇▇▇ Claim"), including any Loss
resulting from the Sellers' failure to defend the ▇▇▇▇▇ Claim in accordance
with this Section 11.6. Notwithstanding the provisions of Section 11.4, the
provisions of this Section 11.6 shall apply to the notice, settlement and
defense of the ▇▇▇▇▇ Claim, including any Action brought in respect thereof.
The Sellers, through the Sellers' Representative, shall assume and control the
defense of the ▇▇▇▇▇ Claim, at the Sellers expense and with counsel of their
choice reasonably satisfactory to the Buyer, which defense shall include the
power to investigate such claim, conduct all communications with ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ or his counsel with respect to the ▇▇▇▇▇ Claim, conduct settlement
discussions, enter into a settlement, or prosecute or defend, in the name of
the Company, any Action relating to the ▇▇▇▇▇ Claim; provided, however, that
the Sellers may not enter into a settlement with respect to the ▇▇▇▇▇ Claim
unless such settlement contains an unconditional release of the Company and the
Buyer from all liability in respect of the ▇▇▇▇▇ Claim; and provided, further,
that the Buyer and the Company may retain separate co-counsel at their cost and
may participate in the defense of the ▇▇▇▇▇ Claim. The Company and the Buyer
shall cooperate in the defense of the ▇▇▇▇▇ Claim, and without limiting the
foregoing shall upon request provide to the Sellers all information and
documentation, and reasonable access to all personnel, in their possession or
under their control which are reasonably required to assist in the defense of
the ▇▇▇▇▇ Claim.
11.7. Certain Other Indemnity Matters. After the Closing, the
Buyer's sole and exclusive remedy with respect to any and all claims relating
to the subject matter of this Agreement (except for disputes with respect to
the preparation of the Closing Balance Sheet and the calculation of the Closing
Working Capital, which shall be resolved in the manner provided in Section
3.2.2, or claims pursuant to Section 7.12 hereof) shall be pursuant to the
indemnification provisions set forth in this Section 11. In furtherance of the
foregoing, the Buyer hereby, on its own behalf and on behalf of its Affiliates,
waives, to the fullest extent permitted under applicable law, and agrees not to
assert in any action or proceeding of any kind, any and all rights, claims and
causes of action it or such Affiliate may now or hereafter have against the
Sellers other than claims for indemnification asserted as permitted by and in
accordance with the provisions set forth in this Section 11 (including any such
rights, claims or causes of action arising under or based upon common law or
other Legal Requirements).
(b) No party shall be liable under this Section 11, and no claim for
indemnification may in any event be asserted under this Section 11, for any
consequential damages by reason of a breach or violation of any representation,
warranty, covenant or other provision.
(c) Upon making any payment to an Indemnitee for any indemnification
claim pursuant to this Section 11, the Indemnifying Party shall be subrogated,
to the extent of such payment,
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to any rights which the Indemnitee may have against other Persons with respect
to the subject matter underlying such indemnification claim.
(d) All costs and expenses of defense incurred by any party as
Indemnifying Party as contemplated by Section 11.4 shall be deemed to
constitute Losses for purposes of Section 11.3.
(e) Any indemnification payments under this Agreement shall be
considered an adjustment to the Purchase Price.
12. CONSENT TO JURISDICTION; JURY TRIAL WAIVER.
12.1. Consent to Jurisdiction. Each party to this Agreement, by its
execution hereof, (i) hereby irrevocably submits, and agrees to cause each of
its Subsidiaries to submit, to the jurisdiction of the state courts of the
State of New York or the United States District Court located in the Southern
District of New York for the purpose of any action, claim, cause of action or
suit (in contract, tort or otherwise), inquiry, proceeding or investigation
arising out of or based upon this Agreement or relating to the subject matter
hereof; (ii) hereby waives, and agrees to cause each of its Subsidiaries to
waive, to the extent not prohibited by applicable law, and agrees not to
assert, and agrees not to allow any of its Subsidiaries to assert, by way of
motion, as a defense or otherwise, in any such action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such
proceeding brought in one of the above-named courts is improper, or that this
Agreement or the subject matter hereof may not be enforced in or by such court;
and (iii) hereby agrees not to commence or to permit any of its Subsidiaries to
commence any action, claim, cause of action or suit (in contract, tort or
otherwise), inquiry proceeding or investigation arising out of or based upon
this Agreement or relating to the subject matter hereof other than before one
of the above-named courts nor to make any motion or take any other action
seeking or intending to cause the transfer or removal of any such action,
claim, cause of action or suit (in contract, tort or otherwise), inquiry,
proceeding or investigation to any court other than one of the above-named
courts whether on the grounds of inconvenient forum or otherwise. Each party
hereby consents to service of process in any such proceeding in any manner
permitted by New York law, and agrees that service of process by registered or
certified mail, return receipt requested, at its address specified pursuant to
Section 14.8 is reasonably calculated to give actual notice.
12.2. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY
WAIVES, AND AGREES TO CAUSE EACH OF ITS SUBSIDIARIES TO WAIVE, AND COVENANTS
THAT NEITHER IT NOR ANY OF ITS SUBSIDIARIES WILL ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE OR ACTION, CLAIM , CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR
OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON
THIS AGREEMENT OR THE
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SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING. THE BUYER ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE
SELLERS THAT THIS SECTION 12.2 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THE
SELLERS ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND ANY OTHER
AGREEMENTS RELATING HERETO OR CONTEMPLATED HEREBY. ANY PARTY HERETO MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 12.2 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT
TO TRIAL BY JURY.
13. TERMINATION.
13.1. Termination of Agreement. This Agreement may be terminated by
the parties only as provided below:
(a) The Buyer and the Sellers' Representative may
terminate this Agreement by mutual written consent at any time prior
to the Closing.
(b) The Buyer may terminate this Agreement by giving
written notice to the Sellers at any time prior to the Closing in the
event the Sellers are in material breach of any representation,
warranty, covenant or agreement contained in this Agreement, the Buyer
has notified the Sellers of the breach and such breach has continued
without cure for a period of ten (10) Business Days after the notice
of breach and there is a reasonable likelihood that such breach will
result in an inability of the Sellers to satisfy the conditions set
forth in Section 8.1.
(c) The Sellers' Representative may terminate this
Agreement by giving written notice to the Buyer at any time prior to
the Closing in the event the Buyer is in material breach of any
representation, warranty, covenant or agreement contained in this
Agreement, the Sellers' Representative has notified the Buyer of the
breach and such breach has continued without cure for a period of ten
(10) Business Days after the notice of breach and there is a
reasonable likelihood that such breach will result in an inability of
the Buyer to satisfy the conditions set forth in Section 9.1.
(d) The Sellers' Representative may terminate this
Agreement by giving written notice to the Buyer at any time prior to
the Closing in the event any Commitment Letter terminates, or is
terminated, for any reason and is not replaced, to the Sellers'
Representative's reasonable satisfaction, with an alternative
financing commitment within five (5) Business Days; provided, however,
that the termination is not the result of the breach of any
representation or warranty or covenant hereunder by the Sellers, the
Company or any of their Affiliates.
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(e) The Sellers' Representative or the Buyer may
terminate this Agreement on or after July 31, 1998; provided, however,
that the failure to consummate the transaction by such date is not the
result of the breach of a representation or warranty or a covenant
hereunder by the party (or any of its Affiliates) seeking termination.
13.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 13.1, all obligations of the parties
hereunder (other than obligations under Sections 7.2, 12, 14 and this Section
13, which shall survive termination) shall terminate without any liability of
any party to any other party; provided, however, that no termination by a party
pursuant to clause (b), (c), (d) or (e) of Section 13.1 shall relieve any party
from any liability arising from or relating to any breach by such party prior
to termination.
13.3. Time of the Essence. Time is and shall be of the essence in
this Agreement.
14. MISCELLANEOUS.
14.1. Entire Agreement; Waivers. This Agreement (including the
Schedules and Exhibit hereto) constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior
and contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties with respect to such subject matter,
other than (i) the Confidentiality Agreement (which shall survive execution and
delivery of this Agreement and shall survive any termination of this Agreement
but shall terminate upon consummation of the Closing) and (ii) any agreements
solely among the Sellers or between the Sellers' Representative and any of the
Sellers. Any waiver of any provision of this Agreement shall not be deemed to
constitute a waiver of any other provision hereof (whether or not similar), and
no waiver shall constitute a continuing waiver unless otherwise expressly
provided and no such waiver shall be effective unless in writing and executed
(i) in the case of a waiver by the Buyer, by an authorized signatory thereof;
and (ii) in the case of a waiver by the Sellers, by the Sellers'
Representative.
14.2. Amendment or Modification. The parties hereto may not amend
or modify this Agreement except by a written instrument executed by the Buyer
and the Sellers' Representative.
14.3. Investigation; No Additional Representations. The Sellers and
the Company have not made and are not making any representation, warranty,
covenant or agreement, express or implied, with respect to the matters
contained in this Agreement other than the explicit representations,
warranties, covenants and agreements set forth herein. The Buyer acknowledges
and agrees that it (i) has made its own inquiry and investigation into, and
based thereon has formed an independent judgment concerning, the Business and
the Steel Heddle Companies; (ii) has been furnished with or given adequate
access to such information about the Business and the Steel Heddle Companies as
it has requested, and (iii) will not assert, after the Closing, except pursuant
to Section 3.2.2 or Section 11, any claim against the Sellers or any of their
respective partners, directors, officers, employees, agents, stockholders,
consultants, investment bankers, brokers, representatives or controlling
Persons, or any Affiliate of any of the foregoing, or hold
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the Sellers or any such Persons liable, for any inaccuracies, misstatements or
omissions with respect to information furnished by the Company, the Sellers or
such Persons concerning the Business, the Steel Heddle Companies, this
Agreement or the transactions contemplated hereby.
14.4. Severability. In the event that any provision hereof would,
under applicable law, be invalid or unenforceable in any respect, such
provision shall (to the extent permitted under applicable law) be construed by
modifying or limiting it so as to be valid and enforceable to the maximum
extent compatible with, and possible under, applicable law. The provisions
hereof are severable, and in the event any provision hereof should be held
invalid or unenforceable in any respect, it shall not invalidate, render
unenforceable or otherwise affect any other provision hereof.
14.5. Successors and Assigns. All of the terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective permitted transferees and assigns (each of
which transferees and assigns shall be deemed to be a party hereto for all
purposes hereof); provided, however, that (i) no transfer or assignment by any
party hereto shall be permitted without the prior written consent of the other
parties hereto and any such attempted transfer or assignment without consent
shall be null and void and (ii) no transfer or assignment by any party shall
relieve such party of any of its obligations hereunder. Notwithstanding the
foregoing, the Buyer may assign its rights and delegate its obligations
hereunder to any Affiliate and after the Closing, to any Person (i) in
connection with a sale of all or substantially all assets of the Buyer, (ii)
who acquires all of the capital stock of the Buyer or (iii) who provides
financing to the Buyer or its Affiliates.
14.6. Limited Liability of Partners. The Buyer agrees that none of
the general, limited partners of any of the BCC Sellers that is a limited
partnership (each, a "Seller Partnership" and collectively, the "Seller
Partnerships") or any general partner of any Seller Partnership shall have any
liability, personal or otherwise, and that neither the Buyer nor any of the
Buyer's Subsidiaries or Affiliates shall seek or be entitled to impose any such
liability on any such general or limited partner, for or by reason of any
obligation of any Seller Partnership or any action or inaction of any Seller
Partnership or any such general or limited partner under, in connection with,
related to or by reason or means of (i) this Agreement, (ii) any of the
transactions contemplated hereby or (iii) the purchase, ownership or
disposition of any Securities; provided, however, that the foregoing shall not
limit the liability of any Seller Partnership to the extent arising from any
obligation of it, or any action or inaction by it, in its capacity as a Seller
or as a direct holder of Securities.
14.7. Public Announcements. At all times no party hereto will issue
or make any reports, statements or releases to the public with respect to this
Agreement or the transactions contemplated hereby without the consent of the
other parties hereto, which consent shall not be unreasonably withheld. If any
party hereto is unable to obtain, after reasonable effort, the approval of its
public report, statement or release from the other parties hereto and such
report, statement or release is, in the opinion of legal counsel to such party,
required by law in order to discharge such party's disclosure obligations, then
such party may make or issue the legally
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required report, statement or release and promptly furnish the other parties
with a copy thereof. Each party hereto will also obtain the prior approval by
the other parties hereto of any press release to be issued announcing the
consummation of the transactions contemplated by this Agreement. Any consent
required of the Sellers under this Section 14.7 may be given by the Sellers'
Representative.
14.8. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing and delivered
personally or sent by telecopier, Federal Express, or registered or certified
mail, postage prepaid, addressed as follows:
If to the BCC Sellers, to: c/o Butler Capital Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇
with a copy to: Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Individual Sellers, to: ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, UCB Tower, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
If to the Buyer , to: c/o American Industrial Partners
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: American Industrial Partners
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Unless otherwise specified herein, such notices or other communications shall
be deemed received (a) on the date delivered, if delivered personally, (b) two
(2) Business Days after being sent by Federal Express, if sent by Federal
Express, (c) one (1) Business Day after being delivered, if delivered by
telecopier and (d) three (3) Business Days after being sent, if sent by
registered or certified mail. Each of the parties hereto shall be entitled to
specify a different address by giving notice as aforesaid to each of the other
parties hereto.
14.9. Headings, Etc. Section and Subsection headings are not to be
considered part of this Agreement, are included solely for convenience, are not
intended to be full or accurate descriptions of the content thereof and shall
not affect the construction hereof.
14.10. Third-Party Beneficiaries. Nothing in this Agreement is
intended or shall be construed to entitle any Person other than the Sellers'
Representative, the parties or their respective transferees and assigns
permitted hereby to any claim, cause of action, remedy or right of any kind.
14.11. Termination of Stockholder's Agreement. Each Seller that is
party to the Stockholder's Agreement dated December 24, 1992 between the
Company and certain stockholders hereby agrees that, effective upon the
Closing, such agreement is hereby terminated and canceled and shall be of no
further force and effect.
14.12. Termination of Consulting Services Agreement. Mfg. Co. and
BCC Industrial Services, Inc., hereby agree that, effective upon the Closing,
the Consulting Services Agreement dated as of January 1, 1996 between the
Company and BCC Industrial Services, Inc. is hereby terminated and canceled and
shall be of no further force or effect.
14.13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
14.14. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic substantive laws of the State of New
York, without giving effect to any choice or conflict of law provision or rule
that would cause the application of the laws of any other jurisdiction.
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59
14.15. Strict Construction. No rule of strict construction shall
apply to or be used against any party hereto.
14.16. Expenses. All costs and expenses (including any fees paid to
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., legal fees and expenses) incurred by the Sellers in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the Sellers directly, or indirectly in the manner contemplated by
Section 3.1 and clause (vi) of Section 11.1.1. All such costs and expenses
incurred by the Company shall be paid by the Company, whether or not the
transactions contemplated hereby are consummated (it being understood that if
such transactions are consummated, such expenses will be borne indirectly by
the Sellers pursuant to Sections 3.1 and 3.2), and all such costs and expenses
incurred by the Buyer (including any fees and expenses incurred in connection
with any financing arranged by the Buyer) shall be paid by the Buyer whether or
not the transactions contemplated hereby are consummated.
[THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed, as of the date first above
written by their respective officers thereunto duly authorized.
THE COMPANY: SH HOLDINGS CORP.
By:/s/ ▇▇▇▇▇▇▇▇ ▇. Team
------------------------------------------
Title:
MEZZANINE LENDING ASSOCIATES II, L.P.
By: Mezzanine Lending Management II, L.P.,
its general partner
MEZZANINE LENDING ASSOCIATES III, L.P.
By: Mezzanine Lending Management III, L.P.,
its general partner
MEZZANINE LENDING MANAGEMENT II, L.P.
MEZZANINE LENDING MANAGEMENT III, L.P.
SENIOR LENDING ASSOCIATES I, L.P.
By: Senior Lending Management I, L.P.,
its general partner
SENIOR LENDING ASSOCIATES II, L.P.
By: Senior Lending Management II, L.P.,
its general partner
SENIOR LENDING MANAGEMENT I, L.P.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
their General Partner
BCC INDUSTRIAL SERVICES, INC.
By:
-----------------------------------------------
its authorized signatory
61
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. Team
--------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. Team
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
LEEWAY & CO.
By: State Street Bank and Trust Company,
as General Partner
By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Title:Assistant Secretary
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. Cash
--------------------------------------------------
▇▇▇▇ ▇. Cash
62
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
*
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Schwinn
*
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Schwinn
*
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇ Schwinn
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. Team III
---------------------------------
▇▇▇▇▇▇▇▇ ▇. Team III
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. Team
---------------------------------
▇▇▇▇▇▇▇ ▇. Team
THE BUYER: STEEL HEDDLE GROUP, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: President
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
*By ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as custodian for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, under South Carolina Uniform Gift for Minors Act.
▇▇▇▇▇▇ CAPITAL CORPORATION
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title:
63
EXHIBIT 3.2.1
STEEL HEDDLE
WORKING CAPITAL
Target April 4, 1998
------ -------------
Actual
------
Cash and cash equivalents 0 276,011
Accounts receivable 10,577,016 11,114,740
Inventories @LIFO 14,230,156 15,071,208
Prepaid expenses 132,707 49,620
----------- -------------
TOTAL CURRENT ASSETS 24,939,879 26,511,579
Accounts payable 1,844,833 2,193,611
Income taxes payable(1) 200,000 1,485,021
Accrued & sundry liabilities 3,822,019 3,130,420
Accrued Interest (384,775) (114,211)
----------- -----------
Adjusted accrued & sundry liabilities 3,437,244 3,016,209
TOTAL CURRENT LIABILITIES 5,482,077 6,694,841
----------- -----------
WORKING CAPITAL 19,457,802 19,816,738
=========== ==========
--------------------
(1) Note: does not include deferred income taxes.
64
EXHIBIT 8.4
SELLER'S COUNSEL OPINION
Special counsel to Sellers shall opine, in a manner reasonably satisfactory to
Buyer, with respect to the following matters (defined terms used herein shall
have the meanings set forth in the Stock Purchase Agreement dated as of May 1,
1998);
1. The Company is duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania and is duly
qualified as a foreign corporation in each such other jurisdiction where the
nature of its business or the ownership of its properties requires such
qualifications, except where the failure to be so qualified would not have a
Material Adverse Effect on the Company. The Company has the corporate power
and authority to own its property and assets and to conduct its business as
presently owned and conducted. The Company has the corporate power and
authority to enter into and perform its obligations under the Stock Purchase
Agreement. The Stock Purchase Agreement has been duly authorized, executed and
delivered by the Company.
2. Each of the Sellers that is not an individual is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and each of such Sellers has the power to enter
into and perform its obligations under the Stock Purchase Agreement. The Stock
Purchase Agreement has been duly authorized (in the case of non-individual
Sellers), executed and delivered by each Seller.
3. The outstanding capital stock of the Company is duly
authorized, validly issued and fully paid and non-assessable. To the Knowledge
of such counsel, the Shares are the only issued and outstanding capital stock
of the Company. As of the date hereof, the Company, directly or indirectly,
owns of record and, to the Knowledge of such counsel, beneficially, all of the
outstanding capital stock of each of its Subsidiaries, except for Steel Heddle
International de Mexico, S.A. DE C.V.
4. The Company's authorized capital stock consists solely of
2,000,000 shares of Class A Common Stock, 8,000,000 shares of Class B Common
Stock and no shares of preferred stock. The Sellers collectively own of record
and, to the knowledge of such counsel, beneficially all of the outstanding
capital stock of the Company, and, to the knowledge of such counsel free and
clear of all encumbrances with full right, power and authority to transfer,
exchange and sell said shares to Buyer. Assuming that the Buyer is acquiring
the outstanding Common Stock in good faith and without notice of any adverse
claims, upon consummation of the transactions contemplated by the Stock
Purchase Agreement, the Buyer will acquire valid title to such stock, free and
clear of all liens.
65
5. To the Knowledge of such counsel, other than as identified in
the Stock Purchase Agreement, there are no outstanding subscriptions, calls,
commitments, warrants or options for the purchase of shares of any capital
stock or other securities of the Company or any securities convertible into or
exchangeable for shares of capital stock or other securities issued by the
Company, or any other commitments of any kind for the issuance of additional
shares of capital stock or other securities issued by the Company.
6. To such counsel's Knowledge, no Action is pending against the
Company with respect to the transactions contemplated by the Stock Purchase
Agreement.
7. The Stock Purchase Agreement constitutes a legally valid and
binding obligation of each of the Company and the Sellers and is enforceable
against each of such parties in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights, or the
applicability of equitable principles.
8. Neither execution and delivery of the Stock Purchase Agreement
nor performance thereunder by the Company or any of the Sellers will (i)
conflict with or violate the organizational documents of such Person (in the
case of non-individual Sellers); (ii) to such counsel's knowledge, violate,
conflict with or constitute a material default under, or result in the
imposition of any material encumbrance on any such Person, pursuant to any
material agreement or commitment to which any of such Person is a party and
which is identified to such counsel by the Company or any of the Sellers as a
material agreement or commitment (except as otherwise noted in such counsel's
opinion); (iii) to such counsel's knowledge, violate any court orders which are
binding on any such Person; or (iv) violate any regulation, rule or statute
applicable to such Person, which violation would have a material adverse effect
on such Person.
9. No authorization, consent, order, permit or approval of, or
notice to or filing with, any court or governmental authority or other person
or entity is required for the execution and delivery of the Stock Purchase
Agreement or the consummation of the transactions contemplated thereby in
accordance with the terms of the Stock Purchase Agreement, other than any such
authorization, consent, order or approval which has been obtained.
-2-
66
EXHIBIT 9.3
BUYER'S COUNSEL OPINION
Special counsel to Buyer shall opine, in a manner reasonably satisfactory to
Seller, with respect to the following matters (defined terms used herein shall
have the meanings set forth in the Stock Purchase Agreement dated as of May 1,
1998):
1. Buyer has been duly organized and is validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to own its property and assets and to conduct its business
as presently owned and conducted. Buyer has the corporate power and authority
to enter into and perform its obligations under the Stock Purchase Agreement,
and all necessary corporate action has been taken by Buyer to authorize the
execution and delivery of the Stock Purchase Agreement and the performance of
its obligations thereunder.
2. To such counsel's Knowledge, no Action is pending against the
Buyer with respect to the transactions contemplated by the Stock Purchase
Agreement.
3. The Stock Purchase Agreement constitutes a legally valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights, or the applicability of equitable principles.
4. Neither execution and delivery of the Stock Purchase Agreement
nor performance thereunder by Buyer will (i) conflict with the Certificate of
Incorporation or By-laws of Buyer; (ii) to the Knowledge of such counsel,
violate, conflict with or constitute a material default under, or result in the
imposition of any material encumbrance on Buyer pursuant to any material
agreement or commitment to which Buyer is a party and which is identified to
such counsel by Buyer as a material agreement or commitment; (iii) violate any
court orders that are binding on Buyer; or (iv) to such counsel's knowledge,
violate any statute, rule or regulation presently applicable to Buyer, which
violation would have a material adverse effect on Buyer.
5. No authorization, consent, order, permit or approval of, or
notice to or filing with, any court or governmental authority or other person
or entity is required for the execution and delivery of the Stock Purchase
Agreement or the consummation of the transactions contemplated thereby in
accordance with the terms of the Stock Purchase Agreement, other than any such
authorization, consent, order, permit or approval which has been obtained.
67
EXHIBIT 11.5.2
ENVIRONMENTAL ESCROW AGREEMENT
-2-
68
SCHEDULE 1
OWNERSHIP
Warrant & Rights to Total
Shares Option Unallocated Fully-Diluted Proportionate
Owned Shares Shares Shares Share
----- ------ ------ ------ -----
CLASS A
-------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 11,250 2,204 13,454 1.2717
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 11,250 2,204 2,060 15,514 1.4665
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 11,250 2,204 13,454 1.2717
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 4,500 882 5,382 0.5087
▇▇▇▇▇▇▇▇ ▇. Team 11,250 2,204 4,140 17,594 1.6631
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 11,250 2,204 2,720 16,174 1.5288
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 11,250 2,204 13,454 1.2717
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 6,750 0 6,750 0.6380
▇▇▇▇ ▇. Cash 2,250 0 2,250 0.2127
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 4,500 0 4,500 0.4254
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 4,500 0 4,500 0.4254
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Schwinn 100 0 100 0.0095
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Schwinn 30 0 30 0.0028
▇▇▇▇▇ ▇▇▇▇▇ Schwinn 30 0 30 0.0028
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 500 0 500 0.0473
▇▇▇▇▇▇▇▇ ▇. Team III 140 0 140 0.0132
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 140 0 140 0.0132
▇▇▇▇▇▇▇ ▇. Team 140 0 140 0.0132
BCC Industrial Services, Inc. 0 31,570 31,570 2.9841
-------------------------------------------------------------------------------------------------------------------
CLASS A TOTALS 91,080 45,676 8,920 145,676 13.7699
-------------------------------------------------------------------------------------------------------------------
CLASS B
-------
SLA I B-1 66,110 66,110 6.2490
SLM I B-1 1,113 1,113 0.1052
SLA II B-2 66,110 66,110 6.2490
MLA II B-3 347,158 347,158 32.8150
MLM II B-3 14,700 14,700 1.3895
Leeway B-3 56,906 56,906 5.3790
MLM III B-4 12,653 12,653 1.1960
Leeway B-4 48,960 48,960 4.6279
MLA III B-4 298,540 298,540 28.2194
-------------------------------------------------------------------------------------------------------------------
CLASS B TOTALS 912,250 0 0 912,250 86.2300
-------------------------------------------------------------------------------------------------------------------
===================================================================================================================
TOTALS 1,003,330 45,676 8,920 1,057,926 100.0000
===================================================================================================================
69
STOCK SUBJECT TO LIENS
1. Pledge, pursuant to Security Agreement, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to Steel
Heddle Mfg. Co. of 4,500 shares of Common Stock as collateral for a loan
by Steel Heddle Mfg. Co. to ▇▇▇▇▇▇ in the original principal amount of
$85,041 pursuant to Note dated as of April 29, 1994
2. Pledge, pursuant to Security Agreement, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to Steel
Heddle Mfg. Co. of 4,500 shares of Common Stock as collateral for a loan
by Steel Heddle Mfg. Co. to ▇▇▇▇▇▇ in the original principal amount of
$85,041 pursuant to Note dated as of April 29, 1994.
-2-
70
SCHEDULE 4.3
SELLERS' EXCEPTIONS TO NON-CONTRAVENTION
1. Credit Agreement dated February 20, 1997 among SH Intermediate Corp., et
al. and NationsBank, N.A., as agent.
-3-
71
SCHEDULE 5.1.2
COMPANY EXCEPTIONS TO NON-CONTRAVENTION
1. Credit Agreement dated February 20, 1997 among SH Intermediate Corp., et
al. and NationsBank, N.A., as agent.
2. Any necessary filings pursuant to ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
3. Chubb Crime Insurance Policy.
-4-
72
SCHEDULE 5.1.4
SH HOLDINGS CORP. SUBSIDIARIES
Name Jurisdiction % Ownership
---- ------------ -----------
SH Intermediate Corp. S. C. 100.00
Steel Heddle Mfg. Co. PA 100.00
Heddle Capital Corp. Delaware 100.00
Steel Heddle International, Inc. S. C. 100.00
Steel Heddle International, Ltd. VI V.I. 100.00
Steel Heddle (Canada) Ltee/Ltd. Canada 100.00
Steel Heddle International de Mexico, S.A. DE C.V. Mexico 99.98(1)
Privada de la ▇▇▇▇▇▇▇ ▇▇. ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, D.F.
Steel Heddle International Japan (Branch) Japan 100.00
Room 905, 1/Otsubashi
Tensho Building, ▇▇. ▇
▇-▇▇-▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
Steel Heddle (Tianjin) Weaving Machine China 100.00
Accessories Co. Ltd.
▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
--------
(1) Remaining .02 consists of one share held by B. Team, one share held by ▇.
▇▇▇▇▇▇, one share held by ▇. ▇▇▇▇▇▇▇ and one share held by ▇. ▇▇▇▇▇▇.
-5-
73
SCHEDULE 5.1.5
DIRECTORS & OFFICERS
SH HOLDINGS CORP.
Directors
---------
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. Team
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Officers
--------
▇▇▇▇▇▇▇▇ ▇. Team President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Secretary & Treasurer
SH INTERMEDIATE CORP.
Directors
---------
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. Team
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Officers
--------
▇▇▇▇▇▇▇▇ ▇. Team President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Secretary & Treasurer
STEEL HEDDLE MFG. CO.
Directors
---------
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. Team
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-6-
74
Officers
--------
▇▇▇▇▇▇▇▇ ▇. Team President & Chief Executive Officer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Executive Vice President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President - Finance & Secretary
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Vice President - Frame Division
▇▇▇▇ ▇. ▇▇▇▇▇▇ Manager - Heddle Division
C. ▇▇▇▇▇ ▇▇▇▇▇ Manager - ▇▇▇▇ Division
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Manager - Rolled Products Division
J. ▇▇▇▇▇ ▇▇▇▇▇▇ General Sales Manager
HEDDLE CAPITAL CORP.
Directors
---------
▇▇▇▇▇▇▇▇ ▇. Team
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Officers
--------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President
▇▇▇▇▇▇▇▇ ▇. Team Vice President, Treasurer
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Secretary, Assistant Treasurer
STEEL HEDDLE INTERNATIONAL, INC.
Directors
---------
▇▇▇▇▇▇▇▇ ▇. Team
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Officers
--------
▇▇▇▇▇▇▇▇ ▇. Team President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Executive Vice President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President - Finance & Secretary
STEEL HEDDLE INTERNATIONAL, LTD. VI
Directors
---------
▇▇▇▇▇▇▇▇ ▇. Team
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
-7-
75
Officers
--------
▇▇▇▇▇▇▇▇ ▇. Team President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Senior Vice President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Secretary
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Treasurer
STEEL HEDDLE (CANADA) LTEE/LTD.
Director
--------
▇▇▇ ▇▇▇▇▇
Officers
--------
▇▇▇▇▇▇▇▇ ▇. Team President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President
▇▇▇ ▇▇▇▇▇ Secretary and Treasurer
STEEL HEDDLE INTERNATIONAL DE MEXICO S.A. DE C.V.
Directors
---------
▇▇▇▇▇▇▇▇ ▇. Team
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
J. ▇▇▇▇▇ ▇▇▇▇▇▇
Officers
--------
▇▇▇▇▇▇▇▇ ▇. Team President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Executive Vice President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President Finance & Secretary
J. ▇▇▇▇▇ ▇▇▇▇▇▇ Vice President
-8-
76
SCHEDULE 5.3
CHANGES IN CONDITION SINCE BALANCE SHEET DATE
None.
-9-
77
SCHEDULE 5.4
ENVIRONMENTAL MATTERS
Greenville, Georgia
1. A septic tank tile field and lime pit with a drain line were used to
dispose of liquid production wastewaters from 1972, until the plant tied
into the City of Greenville's sewer system between 1981 and 1984. It is
believed the septic tile field was located in front of the building. The
lime pit was located near the northwest corner of the building and
drained toward the east. The Company believes that little manufacturing
wastewater was disposed in the septic tank tile field, based upon the
plant's current flow to the sewer system. The lime pit collected a lime
wash water from the solder reeds. No solvents or oil are believed to have
been on the solder reeds at this point in the manufacturing process. No
physical manifestations such as stressed vegetation or discolored soil
were observed during the inspection of these areas by ▇▇▇▇▇▇ and Callcott
Engineers, Inc. in January 1993.
2. In January 1993, ▇▇▇▇▇▇ and Callcott Engineers, Inc. observed a small
area of discolored (black) soil/ash/debris around the base of two air
exhaust units located behind the manufacturing building. The Company
believes that the discolored material was from a fire in one of the
exhaust outlets. The discolored material appeared to be superficial in
nature.
Greensboro, North Carolina
3. A lime pit has been used since the time the plant was built, in
approximately 1964. The lime pit is located along the western wall of the
main building and discharges to the city sewer. The lime pit collects a
lime wash water from the solder reeds. No solvents or oils are believed
to be on the solder reeds at this point in the process. No physical
manifestation such as stressed vegetation or discolored soil were
observed around the lime pit during the inspection of the area by ▇▇▇▇▇▇
and Callcott Engineers, Inc. in January 1993.
4. A 275-gallon aboveground varsol storage tank and a solvent product drum
dispensing rack are located along the northern exterior wall of the main
building. The area around the tank and drum area is not paved and has no
spill containment structure.
5. Along the west outside wall of the main manufacturing building, the
baghouses are located. In January 1993, when this area was inspected by
▇▇▇▇▇▇ and Callcott Engineers, Inc., the area immediately around the
baghouses appeared to be surficially stained.
6. In the yard to the north of the main manufacturing building is an area
where tar had been stored for use in the pitch ▇▇▇▇ manufacturing
process. In January 1993, when this area was inspected by ▇▇▇▇▇▇ and
Callcott Engineers, Inc., the drums of tar had been removed, but tar
residue remained on the ground in the area.
Greenville, North Carolina
7. In 1987, three lagoons at the facility were RCRA certified closed as
landfills by the EPA. In 1989, the facility started ground water
remediation and monitoring at the site to comply with the RCRA post-
closure case requirements. In 1996, the facility was issued a revised
RCRA Part B and Post Closure Care Permit. This permit includes a 30-year
period of post-closure care for the 3 lagoons and requires: (1) the
maintenance of the integrity and effectiveness of the landfills' cover;
and (2) continued ground water recovery and ground water monitoring.
-10-
78
8. There is one external pad-mounted transformer that does not have labels
regarding PCB-content. No evidence of leaks or stains around the
transformer unit have been observed.
9. The facility is a Large Quantity Generator (LQG) of hazardous waste and
is a permitted Treatment Storage and Disposal (TSD) facility for treating
electroplating wastes. At times, the roll-offs containing hazardous waste
have not been appropriately labeled. The facility's Contingency Plus &
Emergency Procedures Plan dated March 29, 1993, is out of date and needs
to be updated to reflect management and operations changes.
The facility is inspected annually by the hazardous waste division of the
South Carolina Department of Health and Environmental Control (DHEC). The
1997 inspection identified deficiencies in the form of open waste
containers, a missing land disposal restriction modification form, and
incomplete hazardous waste determinations, which the facility
subsequently addressed. No penalties were assessed for the 1997
deficiencies.
In 1992, the facility received a Notice of Violation (NOV) resulting from
noncompliance items with respect to hazardous waste determinations,
manifest discrepancies, hazardous waste drum labeling discrepancies,
hazardous waste storage on-site longer than 90 days, the absence of
identification for satellite storage areas, irregular maintenance of
quarterly reports, improper employee training, and inadequate hazardous
waste weekly inspections. The facility was assessed a penalty of $18,250
for these violations.
10. Aqua-Tech Hazardous Waste Treatment Facility, Greer, South Carolina
Steel Heddle was assessed and remitted a sum of $115,513 for response
costs incurred by DHEC at the Aqua-Tech site. Steel Heddle settled with
the Aqua-Tech PRP Group and paid a sum of $42,806 in settlement of all
response costs incurred in connection with the surface clean-up at the
Aqua-Tech site through February 28, 1997. The Aqua-Tech PRP Group did not
settle its claim against Steel Heddle for Steel Heddle's allocated share
of the RI/FS costs (estimated to be $2,500.28). The settlement also did
not include the Aqua-Tech PRP Group's claim against Steel Heddle for
future remediation costs.
11. Beaco Road Site, South Carolina
Steel Heddle was alleged to be a PRP at the Beaco Road site. In an order
dated December 9, 1995, Judge G. ▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr. dismissed Steel
Heddle from the case. Judge ▇▇▇▇ concluded that Steel Heddle did not
deliver or arrange for the delivery of any hazardous substance to the
site.
12. Douglasville Site, Pennsylvania Banks Associates, Inc.
Litigation Steel Heddle was alleged to be a PRP at the Douglasville site.
In an order dated January 31, 1994, Judge ▇.▇. ▇▇▇▇▇▇▇▇ dismissed Steel
Heddle without prejudice and gave the third-party plaintiffs thirty days
to effect service of another complaint, and that deadline passed without
an additional compliant being served. On April 1, 1994, the court
confirmed that Steel Heddle was out of the case.
13. Jadco-▇▇▇▇▇▇ Site, Belmont, North Carolina
On June 12, 1986, USEPA requested Steel Heddle to submit information in
connection with alleged disposal of waste at the Jadco-▇▇▇▇▇▇ site. In
letters dated June 20, 1986 and June 24, 1986, Ogletree, Deakins, et al.,
counsel for Steel Heddle, responded that Steel Heddle had no records of
sending wastes to the Jadco-▇▇▇▇▇▇ site. No further response has been
received from the USEPA.
14. The facility discharges sanitary wastewater and treated process
wastewater to the Taylors Wastewater Treatment Plant in accordance with
an Industrial Wastewater Discharge Permit (ID-0080C, expires 3/31/2000)
issued by the Western Carolina Regional Sewer Authority (WCRSA). The
facility is currently identified as a categorical wastewater discharger
due to its industrial operations of
-11-
79
electroplating and metal finishing. This categorical industry
identification designates pretreatment standards for all associated
metal finishing industries. The categorical parameters and limitations
identified in the facility's permit were determined in accordance with
40 CFR 433.15 (Pretreatment standards for existing sources - metal
finishing subcategory). The facility conducts monitoring in accordance
with the requirements of the permit and 40 CFR 433.15.
WCRSA conducts annual inspections of the facility. The 1996 and 1997
inspection reports indicated that the facility had a violation of permit
conditions/limitations or sewer use regulations. However, no details
were provided in the reports and the facility did not receive a NOV and
was not assessed any penalty. The 1995 and 1996 effluent quality data do
not reveal any significant areas of concern except for two exceedances
of the total chromium limitation and an exceedance for total flow.
15. The facility discharges storm water to Mountain Creek under a general
permit (SCR006000) issued by the DHEC that expired on September 30,
1997. DHEC informed the facility that a renewal application was not
necessary. DHEC indicated that it is running behind schedule and a
revised permit will be issued soon. DHEC informed the facility that the
existing permit conditions would not be changed. The facility conducts
semi-annual monitoring for selected parameters. At the request of DHEC,
results of the analysis of the storm water sampling is maintained
on-site by the facility (the permit states that the results should be
submitted to DHBC).
16. In 1993, the facility conducted whole effluent toxicity test. Results of
the test indicated that the storm water discharge was of concern (acute
toxicity to the fish was observed at the 100% effluent concentrations).
Facility personnel are unaware if the results were submitted to DHEC.
17. The facility is currently not subject to Title V permitting process. The
facility is currently operating under Air Quality Permit No. 1200-0006
(issued December 8, 1997; expires November 30, 2002) and is identified
as having 14 emission sources. Among other items, the permit requires
the facility to maintain logs on the three boilers whenever the boilers
are in operation, prepare an operation and maintenance plan for all
scrubbers, monitor and record velocity pressure at the inlet and the
pressure drop across the chrome scrubber, maintain inspection and
maintenance records on the chrome line scrubber and the chrome line
plating tanks, maintain records of trichlomedrylene use in the
degreaser, etc. The facility has not yet implemented all the required
procedures to comply with the monitoring and recordkeeping requirements
of the operating permit.
18. The facility is inspected annually by the Air Quality Division of DHEC.
In 1997, the facility received a NOV for not including control equipment
in the permit, which the facility subsequently addressed. No penalties
were assessed for this violation.
19. The SPCC Plan is out of date. SPCC plans must be reviewed and updated
once every three years. The facility's SPCC plan was prepared in 1993
and has not been updated since.
20. Four phases of ground water quality assessment were conducted that
identified and delineated VOC contamination at SWMU 39-42. In August
1989, ground water remediation was initiated in accordance with RCRA
Corrective Action. The purpose of well network is to monitor and recover
contaminants originating from two closed waste management units (Lagoon
1 and Lagoon 2&3).
The current monitoring and recovery system consists of 4 recovery ▇▇▇▇▇,
29 monitoring ▇▇▇▇▇, and six piezometers. The primary VOCs and the
corresponding 1997 maximum levels are: 1,1-DCA (70 ppb), 1,1-DCE (91
ppb), 1,2-DCE (49 ppb), PCE (20 ppb), and TCE (13 ppb). The combined
recovery flow rate is 14.5 gpm, and the extracted water is used as
process water in the electroplating operation or is discharged directly
to POTW.
-12-
80
There are also three production ▇▇▇▇▇ at the site (PW1-PW3) that are 350
ft, 250 ft and 405 ft deep. In 1989, PW3 contained TVOC's at 39 ppb. PW1
has never been used. PW2 produced 10 gpm, but is currently inactive. PW3
produces 75 gpm and it periodically used to supplement the process
water. No production, public or private water ▇▇▇▇▇ are located within
a one mile radius of the site other than SHM's on-site production ▇▇▇▇▇.
Residential potable water is provided by a municipality that obtains
water from a surface water supply.
21. Embankment Fill Area (SWMU 46) This is a 400 ft x "100 ft x 20 fit thick
grassy embankment immediately west of five former ponds and next to
▇▇▇▇. ▇▇. The embankment was used for the disposal of various wastes
including foundry sand until 1979, foundry-related wastes, construction
debris, 55-gallon drums, tile, scrap metal, bricks, etc. In 1988, the
debris observed in the embankment was spent foundry sand and half-buried
drums. At that time, Steel Heddle removed exposed drums. In 1994, EPA
collected one surface composite sample that contained elevated nickel,
barium and chromium.
22. Former Waste Disposal Area (SWMU 45) This unit consists of a heavily
vegetated area where deteriorated drums as well as vegetative and
construction debris were periodically dumped from 1961 to 1979. In 1976,
Steel Heddle received a complaint related to excessive smoke due to
burning of construction debris and heavy brush in this area of the
property. During the 1988 RFA, two drums were unearthed that contained
wooden bobbins and a black oily substance. At that time, Steel Heddle
removed visible drums for off-site disposal. During the 1993 Phase I,
deteriorated drums and construction debris were noted in the area. The
▇▇▇▇ ▇▇▇ indicated that wastes included foundry sand, glue wastes, ▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ wastes, creosote poles and construction debris. In
1994, 3 surface soil samples were collected and elevated barium, nickel
and chromium were detected. SCDHEC indicated ground water flow in this
area is not known.
23. Old Surface Impoundments (SWMU 44) This unit consists of five former
unlined ponds that received metal working wastewaters and hazardous
wastewaters from electroplating operations from about 1961 to 1979. The
units are located in any open area each of the Embankment Fill area and
west of Building 35. One of the ponds is located beneath Building 35.
Four of the ponds were taken out of service in 1970 and one of the ponds
was taken out of service 1971 and backfilled in 1979. No documentation
is available concerning the method of closure of the ponds. During the
1988 RFA, this area contained stressed vegetation. Downgradient well W-9
did not contain VOCs; therefore, the EPA stated no further action.
24. Inert Landfill (SWMU 38) This unit operated from at least 1979 to 1989
as a state-permitted solid waste landfill (IWP 171) that received spent
foundry sand consisting of a mixture of clays, Columbia sand, and
graphite. The ▇▇▇▇ ▇▇▇ noted that salt deposits cleaned from molds used
in coating operations were present in the landfill. In 1989, the
landfill was closed by capping with SCDHEC's review, but no waste
materials were recovered. In 1993, facility personnel indicated that as
old glue ditch may have been incorporated into landfill. The SCDHEC
believed that the landfill is located sidegradient of the closed surface
lagoons and the groundwater flowing beneath the landfill may discharge
to the Mountain Creek tributary upstream of the monitoring well network
and recovery ▇▇▇▇▇. In 1993, a temporary well was installed northeast of
the unit, and no VOCs were detected. In 1994, a groundwater sample
collected from a well near the creek contained several VOCs above MCLs.
25. Hazardous Waste Drum Storage Area (SWMU 10) This is a 40 ft x 40 ft
concrete pad with 6-inch high containment berm on two sides and spill
collection trench on one side. In 1991, TCLP sampling was conducted on
runoff from this unit, which did not indicate an impact. A sump in the
pad was subsequently hand-piped to WWTP. In ▇▇▇▇ ▇▇▇ noted that the
concrete pad was cracked and two surface soil samples were collected
that contained low levels of xylene and toluene and elevated CaPAHs.
-13-
81
26. Acid Dump Receiver (SWMU 17) This is an indoor, underground concrete
tank with a capacity of 2,000 gallons. The unit receives acidic
wastewater with high nickel and zinc content from electroplating
operations with a pH of 2. In December 1993, about 170 gallons of
wastewater were released through a deteriorated portion of one concrete
wall and two adjoining corners of the unit. The tank was immediately
removed from service, repaired and returned to service in June 1994. A
soil sample was collected near the unit for TCLP metals, which showed no
high metals, but zinc, nickel and pH were not analyzed. Well W-10 is
located 110 ft downgradient of unit and contained water with pH of 5.28
in 12/93 and a pH of 3.79 in 12/94.
27. Sludge Storage Tanks (SWMU 30) This unit consists of two 15,000 gallon
ASTs that were positioned on unpaved ground. Each tank receives 5,500
gallons of electroplating metal hydroxide sludge (ROO6) from the
clarifier per day. A 1986 analysis of sludge indicated high nickel
(2,670 ppm), zinc (42,310 ppm), and chromium (13,960 pp,). The ▇▇▇▇ ▇▇▇
noted sludge spillage on ground in area of ASTs. Both ASTs are now
located on a concrete pad with containment and rain that transports
spillage to a concrete basin (but there may be exposed ground surface).
In 1994, two soil samples contained chromium (5,200 and 4,700 ppm) and
nickel (5,900 and 5,200 ppm).
28. Runoff Ditch SW of Bldg 18 (AOC A) This is a shallow grassy ditch that
runs from an asphalt paved lot adjacent to the former foundry building
to a wooded area known as the former waste disposal area (SWMU 45).
During the 1988 RFA, oil staining was noted in the ditch. In 1989,
surface oil sampling revealed low VOCs and PHCs (90 ppm). The 1993 Phase
I indicated that the soil was black due to nature of foundry sands. In
1994, two soil samples detected petroleum SVOCs and metals.
29. Air Compressor Blowdown Area (AOC D) This area is along a wall of Bldg
29 and covers an area 200 sq. ft of which 80 ft is covered with
concrete. In 1996, 3 soil samples were collected that contained TPHCs at
a maximum level of 6,680 ppm.
30. Fuel Oil Containment Area (AOC C) This area contains two 20,000 gallon
fuel oil ASTs, one 5,000 gallon duel oil AST and one ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
AST. The ASTs were installed in 1974. Historically, the tank valves
dripped during hose disconnects after filling operations on unpaved
ground. During the 1993 RFA, this area was unpaved. SHM has since paved
the area with asphalt and has installed drip pans below the tank valves
to catch drippage. No soil sampling or removal of potentially
contaminated soil has been conducted.
31. Oil/Water Separator (SWMU 8) This unit was constructed in 1976 and
effluent discharges to the POTW. During the 1988 RFA, oil foundry sand
and rags were observed under the freshly graded soil in the area around
this unit. In addition, heavy staining was observed on the walls of the
tank and on the soil around the unit. During the 1993 Phase I, very
minor staining was observed along exterior wall with no observed leakage
or stained soil around unit. In 1993, SHM indicated that this unit is
drained annually and inspected and that the unit is intact. No soil
sampling or excavation of potentially contaminated soil has been
conducted.
32. Former Tumbler Waste Receiver Tank (SWMU 33) This unit was installed in
1987 and received wastewater from the tumbling and seed operation sump
(SWMU 6). The unit consists of a 6,300 gallon oil separator tank
associated with the WWTP. The tank has been taken out of service, but
the sludge has not been removed from the tank. Apparently, a pipe
associated with the tank has a tendency to leak or break. During the
▇▇▇▇ ▇▇▇, a large stain was observed northwest of the tank. During the
1993 Phase I, soil staining around a valve at base of tank was observed.
Facility personnel indicated it was from a slow leak in underground
piping which was repaired. No soil sampling or removal of potentially
affected soil has been conducted.
-14-
82
33. Oil Sump at Foundry Compressor Building (SWMU 5) This unit was 3.5 ft x
3.5 ft concrete unit that collected storm water runoff and waste oil
from a compressor, and transported the waste to a storm water drainage
ditch. During 1988 RFA, extensive oil staining was noted around sump
and its discharge point was not known. In 1989, an RFI was conducted in
this area that did not verify a release from this area. During the 1993
Phase I, the oil sump was observed to be abandoned and filled, which
occurred when the foundry building was razed. No soil sampling or
removal of potentially affected soil has been conducted.
34. Unnamed Tributary of Mountain Creek The facility's wastewater discharged
to Mountain Creek from about 1948 to 1976. A 1960 effluent sample
contained chromium (6.1 ppm) and cyanide (1.8 ppm). In 1967, Steel
Heddle obtained a NPDES permit for its discharge of treated sanitary and
process wastewater. SCDHEC files contain several complaints dated
between 1968 to 1975 that indicate high pH, fecal coliform, chromium,
copper and cyanide levels in the outfall, as well as anodizing and
discoloration in Mountain Creek. A 1970 document cites a construction
permit issued to SHM to add cyanide, chromium, alkaline, acid, floor
washings and sludge from clarifier as a large lagoon with discharge to
Mountain Creek.
35. Suspected Septic System The 1993 Phase I indicated that the facility
likely had a septic system when the facility was constructed, but its
location is unknown. A 1967 document cites a permit for the construction
of an aerated oxidation pond for sanitary waste with discharge to
Mountain Creek. This pond is in the area of RCRA Lagoon 3.
Westminster, South Carolina
36. The facility was previously a Large Quantity Generator (LQG) of
hazardous waste (EPA ID #SCD045095454). The facility's LQG stains was
based on generation of waste Naphtha and flux containing acid. In
1994-95 the facility switched to Naphtha-140, a nonhazardous material
and a non-acid flax. Hazardous wastes are no longer generated at the
facility.
As reported in a 1993 Phase 1 environmental assessment report prepared
by ▇▇▇▇▇▇ and Callcott Engineers, Inc., the facility has received
several Notices of Violation (NOV) resulting from noncompliance items
with respect to hazardous waste determinations, disposal of special
wastes at a municipal landfill without written authorization, manifest
requirements, waste down labeling discrepancies, irregular maintenance
of quarterly reports, improper employee training, and inadequate
hazardous waste weekly inspections. The facility paid a penalty of
$21,650 for these violations.
37. The facility discharges sanitary wastewater and process wastewater
(cooling water) to the Coneross Creek Wastewater Treatment Plant in
accordance with an Industrial Wastewater Discharge Permit (OC-000022
expires 1/31/1999) issued by the Oconee County Sewer Commission (OCSC).
The facility is currently identified as a non-categorical wastewater
discharger because it does not perform any of the six basic metal
finishing operations listed in the federal regulations (40 CFR 433.15 --
pretreatment standards for existing sources). Pretreatment of wastewater
is not required. The facility conducts monitoring and reporting in
accordance with the requirements of the permit.
OCSC conducts quarterly inspections of the facility's process wastewater
discharge. The Fourth Quarter 1997 inspection report indicated that the
facility had a violation of permit discharge limits for biochemical
oxygen demand (BOD), oil and grease, and total suspended solids (TSS).
The facility received a NOV, but was not assessed any penalty. The 1996
and 1997 effluent quality data do not indicate any significant areas of
concern except for the exceedances of the oil and grease and TSS
limitations noted above.
-15-
83
38. Several spills/releases from former underground product transfer piping
from the aboveground mineral spirits and ammonia storage tanks occurred
between 1981 and 1988. The releases were not reported to SCDHEC and no
soil or ground water sampling or remediation were conducted. The
underground lines were removed in 1988/89 and replaced with aboveground
transfer lines.
-16-
84
SCHEDULE 5.5.1
LIENS ON PERSONAL PROPERTY
1. Credit Agreement dated February 20, 1997 among SH Intermediate Corp., et
al. and NationsBank, N.A., as agent.
-17-
85
SCHEDULE 5.5.2
OWNED REAL PROPERTY
Location
--------
Greenville, SC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
(excluding 0.58 acres sold on March 12, 1998 for $183,392.93)
▇▇▇▇▇▇▇▇▇▇ County, GA
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-18-
86
SCHEDULE 5.5.2(a)
LIENS ON OWNED REAL PROPERTY
1. Liens held by NationsBank, N.A. pursuant to Credit Agreement dated
February 20, 1997.
2. Title Exceptions: Oconee County, South Carolina
- Title to that portion of the land embraced within the bounds of
SC Highway 183 and SC ▇▇▇▇▇▇▇ ▇▇-▇▇▇.
- Easement granted to State Rural Electrification Authority by
instrument filed September 15, 1937 in the Office of the Clerk of
Court for Oconee County, South Carolina in Book 4-T, Page 231.
3. Title Exceptions: Greenville County, South Carolina
- Title to that portion of the land embraced within the bounds of
Sunnydale Drive.
- Easement granted to Duke Power Company by instrument dated
October 5, 1948, filed October 15, 1948, in the Office of the RMC
for Greenville County, South Carolina in Book 362, Page 197.
- Easement granted to Duke Power Company by instrument dated
November 10, 1948, filed November 17, 1948, in the Office of the
RMC for Greenville County, South Carolina in Book 365, Page 250.
- Easement granted to Western Carolina Regional Sewer Authority by
instrument dated October 14, 1974, filed November 4, 1974 in the
Office of the RMC for Greenville County, South Carolina in Book
1009, Page 597.
- Easement 68 feet in which for the purpose of electrical
transmission lines as shown on plat of survey entitled, "Survey
for Steel Heddle Mfg. Co.", dated February, 1988, revised May,
1989 and recorded in Plat Book 17-A at Pages 45 and 46 in the
Office of the RMC for Greenville County, South Carolina.
- Encroachment of the fence located on the land over and across the
railroad right-of-way along the southern boundary line.
- Riparian rights incident to the premises.
- Notice of Use of Property for Management of Hazardous Waste
executed by Steel Heddle Mfg. Co., dated June 9, 1989 and
recorded June 14, 1989 in the Office of the RMC for Greenville
County, South Carolina in Deed Book 1364 at Page 649.
4. Title Exceptions: ▇▇▇▇▇▇▇▇▇▇ County, Georgia
- Matters as shown on plat of survey prepared by ▇▇▇▇ ▇. ▇▇▇▇, Str.
and Associates, Surveyors, for First Union National Bank of North
Carolina and Steel Heddle Mfg. Co., dated 2/1/93, revised on
2/10/97, and recorded in Plat Book 17, Page 20, ▇▇▇▇▇▇▇▇▇▇ County
Records, namely:
-19-
87
- branch crossing central portion of subject property in an
east-west direction;
- power line, poles and guy wires located in southeasternmost
portion of subject property, said power line running in
northwesterly direction to power poles, guy wires and 18-inch
c.m.p.;
- sanitary sewer service line, power pole, telephone line, gas
meter, water meter and water valve located in southwesterly
portion of subject property; and
- asphalt parking lot encroaches onto adjacent property to the
southeast.
5. Title Exceptions: Guilford County, North Carolina
- Easements, setback lines, and any other facts shown on the plat
recorded in Plat Book 32, Page 9, Guilford County Registry,
including but not limited to the following: ten (10) foot
easement along the rear property line.
- Encroachments, overlaps, boundary line disputes, access,
deficiency in quantity of land, and any other matters which would
be disclosed by a current and accurate survey and inspection of
the land occurring subsequently to January 11, 1993, being the
date of a survey by ▇▇▇▇▇▇▇ ▇. Case, R.S. said survey reveals the
following: a) a portion of a twenty (20) foot easement along the
northerly property line; b) overhead power liens (poles) crossing
insured premises; c) overhead telephone lines (poles) crossing
insured premises; d) gravel area, fence and metal storage
building all encroach into said portion of twenty (20) foot
easement; e) fence from property adjoining to the west encroaches
onto insured premises.
-20-
88
SCHEDULE 5.5.2(b)
LEASED REAL PROPERTY
Lease for Steel Heddle International de Mexico, S.A. DE C.V. for property
located at Privada de la ▇▇▇▇▇▇▇ ▇▇. ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, D.F.
Lease for sales office located at ▇▇▇▇ ▇▇▇, ▇/▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Building, ▇▇.
▇, ▇-▇▇-▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇.
Lease between Steel Heddle Manufacturing Company, as Lessor, and Duke Power
Company, as Lessee dated September 29, 1981, filed October 7, 1981 in the
Office of the Clerk of Court for Oconee County, South Carolina in Book 14-N,
Page 229.
Lease between Steel Heddle Manufacturing Co., as Lessor, and Duke Power
Company, as Lessee, dated October 24, 1963 filed November 8, 1963, in the
Office of the RMC for Greenville County, South Carolina in Book 735, Page 525.
Lease between The Steel Heddle Manufacturing Company, as Lessor, and Duke Power
Company, Lessee, dated November 27, 1961, filed December 8, 1961, in the Office
of the RMC for Greenville County, South Carolina in Book 688, Page 143.
-21-
89
SCHEDULE 5.6
LIST OF TRADEMARKS, PATENTS AND LICENSES
TRADEMARKS
--------------------------------------------------------------------------------
Trademark Registration No.
--------- ----------------
--------------------------------------------------------------------------------
MVS (Mechanical Variable Speed) 1039122
--------------------------------------------------------------------------------
SH (▇▇▇▇) 1168075
--------------------------------------------------------------------------------
Duralite 1177859
--------------------------------------------------------------------------------
Draw-O 1496549
--------------------------------------------------------------------------------
SH (Chinese) 94003088
--------------------------------------------------------------------------------
Jet Eye 2062780
--------------------------------------------------------------------------------
[The rest of this page intentionally has been left blank.]
-22-
90
PATENTS
-----------------------------------------------------------------------------------------------------------------------------
TITLE PATENT NO. ISSUE DATE FILING DATE
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame with locking clamp block 5,560,399 10/1/96 7/31/95
center brace assembly
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame endbrace assembly 5,477,889 12/26/95 12/16/94
-----------------------------------------------------------------------------------------------------------------------------
Double ▇▇▇▇ ▇▇▇▇ with increased separation 5,415,205 5/16/95 2/25/94
between front and back dent rows
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame assembly with releasable end 5,411,061 5/2/95 12/16/93
braces
-----------------------------------------------------------------------------------------------------------------------------
Heddle eyelet structure 5,348,055 9/20/94 5/6/93
-----------------------------------------------------------------------------------------------------------------------------
Nose guide for a heddle frame 5,275,210 1/4/94 8/11/92
-----------------------------------------------------------------------------------------------------------------------------
Harness frame with drop-through bolted 4,924,916 5/15/90 5/19/89
centerbrace
-----------------------------------------------------------------------------------------------------------------------------
Light weight heddle frame assembly slat 4,913,194 4/3/90 11/18/88
-----------------------------------------------------------------------------------------------------------------------------
Light weight heddle support bar 4,913,193 4/3/90 2/14/89
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame for a high speed weaving 4,706,717 11/17/87 8/25/86
machine
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame for a high speed weaving 4,687,030 8/18/87 8/14/86
machine
-----------------------------------------------------------------------------------------------------------------------------
Roll-formed shear-resistant frame slat 4,633,916 1/6/87 6/24/85
-----------------------------------------------------------------------------------------------------------------------------
Reinforced heddle frame slat and method 4,596,275 62/4/86 10/12/84
-----------------------------------------------------------------------------------------------------------------------------
Land heddle device 4,572,241 2/25/86 11/20/84
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame and composite frame slat 4,508,145 4/2/85 7/6/82
construction
-----------------------------------------------------------------------------------------------------------------------------
Extruded ▇▇▇▇▇▇ ▇▇▇ and cap 4,492,256 1/8/85 6/30/82
-----------------------------------------------------------------------------------------------------------------------------
Dent counter for loom ▇▇▇▇ 4,331,865 5/25/82 10/9/79
-----------------------------------------------------------------------------------------------------------------------------
Shuttle grip 4,298,032 11/3/81 9/7/78
-----------------------------------------------------------------------------------------------------------------------------
Apparatus for reinforcing a heddle frame slat 4,254,802 3/10/81 5/17/79
of a loom
-----------------------------------------------------------------------------------------------------------------------------
Heddle ▇▇▇ ▇▇▇▇ device for a loom 4,252,153 2/24/81 4/23/79
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame nose guide 4,232,713 11/11/80 4/23/79
-----------------------------------------------------------------------------------------------------------------------------
Lease rods for textile apparatus 4,183,380 1/15/80 6/26/78
-----------------------------------------------------------------------------------------------------------------------------
Bobbin 4,114,828 9/19/78 5/23/77
-----------------------------------------------------------------------------------------------------------------------------
-23-
91
-----------------------------------------------------------------------------------------------------------------------------
TITLE PATENT NO. ISSUE DATE FILING DATE
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame with torque locking block 5,630,448 5/20/97 3/25/96
centerbrace assy. Twist in center bar
-----------------------------------------------------------------------------------------------------------------------------
Dog bone rodslot 2,545,889 4/12/93
-----------------------------------------------------------------------------------------------------------------------------
Harness frame slat and heddle 4,790,357 12/13/88 8/6/87
-----------------------------------------------------------------------------------------------------------------------------
Drawing-in of heddles remote from a loom 4,760,628 8/2/88 9/15/86
harness frame
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame for a high speed weaving 4,750,526 6/14/88 8/17/87
machine
-----------------------------------------------------------------------------------------------------------------------------
M/Roll-formed shear-resistant frame slat 4,633,916 6/1/87 6/24/85
-----------------------------------------------------------------------------------------------------------------------------
Stabilized nose guide 4,565,223 1/21/86 10/29/84
-----------------------------------------------------------------------------------------------------------------------------
Loom ▇▇▇▇ with plastic profiled dents 4,529,014 7/16/85 8/29/83
-----------------------------------------------------------------------------------------------------------------------------
Releasable ▇▇▇▇▇▇ ▇▇▇ connector 4,503,890 3/12/85 4/13/83
-----------------------------------------------------------------------------------------------------------------------------
Reinforced loom shuttle and method 4,487,234 12/11/84 4/5/82
-----------------------------------------------------------------------------------------------------------------------------
Composite dual-face heddle frame slat 4,484,604 11/27/84 9/6/83
-----------------------------------------------------------------------------------------------------------------------------
Double dent lightweight ▇▇▇▇ construction 4,481,980 11/13/84 7/26/82
-----------------------------------------------------------------------------------------------------------------------------
Composite ▇▇▇▇▇▇ ▇▇▇ 4,476,900 10/16/84 1/27/82
-----------------------------------------------------------------------------------------------------------------------------
Stabilized shuttle grip 4,441,529 4/10/84 11/29/82
-----------------------------------------------------------------------------------------------------------------------------
Wraparound adjustable center brace 4,432,398 2/21/84 6/16/82
attachment
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame assembly construction and 4,404,995 9/20/83 4/10/81
method
-----------------------------------------------------------------------------------------------------------------------------
Squeeze ▇▇▇ ▇▇▇▇ 4,404,994 9/20/83 1/27/82
-----------------------------------------------------------------------------------------------------------------------------
Foldable nose guide device for a heddle 4,364,420 12/21/82 3/23/81
frame
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame 4,106,529 8/15/78 10/22/76
-----------------------------------------------------------------------------------------------------------------------------
Heddle frames 4,060,102 11/29/77 10/12/76
-----------------------------------------------------------------------------------------------------------------------------
Loom harness 4,036,264 7/19/77 7/23/76
-----------------------------------------------------------------------------------------------------------------------------
Heddle frame 4,036,263 7/19/77 6/14/76
-----------------------------------------------------------------------------------------------------------------------------
Plastic bobbin or quill 3,993,265 11/23/76 3/17/75
-----------------------------------------------------------------------------------------------------------------------------
-24-
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LICENSES
---------------------------------------------------------------------------------------------------------------------------
TYPE LICENSOR LICENSEE
---------------------------------------------------------------------------------------------------------------------------
License of Duralite process (thermal bonding of wire Steel Heddle Mfg. Co. Takayama Enterprises
reeds by use of plastics), materials and equipment by Corporation (Japan)
Technology License Agreement dated 10/17/95.
---------------------------------------------------------------------------------------------------------------------------
-25-
93
SCHEDULE 5.7
CONTRACTUAL OBLIGATIONS
- Computer Consulting Agreement dated February 3, 1998 between AGS and
Steel Heddle.
- Consulting Agreement dated January 1, 1996 between BCC Industrial
Services, Inc. and Steel Heddle, as amended as of March 31, 1998. (to be
terminated as of Closing)
- Confidentiality Agreement dated December 15, 1997 between ▇▇▇▇▇ Beheer
nv. and Steel Heddle in connection with review of the business
operations of ▇▇▇▇▇▇▇▇▇.
- Deferred Compensation Agreement with the following executives with total
obligation of $84,000:
1. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated July 14, 1995.
2. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated July 14, 1995.
3. ▇▇▇▇▇▇▇▇ ▇. Team dated July 14, 1995.
4. J. ▇▇▇▇▇ ▇▇▇▇▇▇ dated July 14, 1995.
5. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated July 14, 1995.
6. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated July 18, 1995.
- Severance Agreement dated April 18, 1995 with the following executives,
as amended on December 5, 1997:
1. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
2. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
3. ▇▇▇▇▇▇▇▇ ▇. Team.
4. J. ▇▇▇▇▇ ▇▇▇▇▇▇.
5. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
- Employee Stock Option Agreements with the following seven individuals:
(to be terminated as of Closing)
1. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated February 21, 1997.
2. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated February 21, 1997.
3. ▇▇▇▇▇▇▇▇ ▇. Team dated February 21, 1997.
4. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated February 21, 1997.
5. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated February 21, 1997.
6. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated February 21, 1997.
7. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated February 21, 1997.
- Exclusive Sales Representative Agreements with approximately 45
individual sales representatives.
- Miscellaneous post-retirement benefits that in the aggregate do not
exceed $50,000 annually (See Schedule 5.12 -- Schedule of Benefits).
- Executive Performance Bonus Agreement dated as of January 5, 1998 with
each of ▇▇▇▇▇▇▇▇ ▇. Team, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, J. ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and C.
▇▇▇▇▇ ▇▇▇▇▇ (See Schedule 5.12 -- Schedule of Benefits).
- Middle Management Profit Sharing Plan (See Schedule 5.12 -- Schedule of
Benefits).
- Employment Agreement with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated May 1, 1997.
-26-
94
- Debt of SH Intermediate Corp. to Heddle Capital Corp. in principal
amount of $40,000,000 dated February 21, 1997. (to be paid at Closing)
- Debt of Steel Heddle Mfg. Co. to Heddle Capital Corp. in principal
amount of $55,000,000 dated February 21, 1997. (to be paid at Closing)
- Payment totaling $120,121 to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ pursuant to Severance
Agreement dated April 15, 1995.
- Sale Bonus Agreements dated April 21, 1998 with the following
individuals:
1. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
2. ▇▇▇▇▇▇▇▇ ▇. Team.
3. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
- Refer to Schedule 1: Stock Subject to Liens.
- Refer to Schedules 5.12 and 5.5.2(b).
-27-
95
Schedule 5.8
INSURANCE POLICIES
------------------------------------------------------------------------------------------------------------------------------------
CARRIER POLICY # EXPIRATION DATE TYPE POLICY LIMITS
------------------------------------------------------------------------------------------------------------------------------------
Travelers Indemnity Co. KTJCMB267T527097 4/1/99 Property $5,000,000 (Primary)
------------------------------------------------------------------------------------------------------------------------------------
Westchester Fire Insurance Co. ▇▇▇▇▇▇▇▇▇ 4/1/99 Property $5,000,000 Excess $5,000,000
------------------------------------------------------------------------------------------------------------------------------------
Hartford Fire Insurance Co. 10XLSSD8393 4/1/99 Property $10,000,000 Excess of $10,000,000
------------------------------------------------------------------------------------------------------------------------------------
Hartford Fire Insurance Co. 10XLSQG0985 4/1/99 Property $20,000,000 Excess of $20,000,000
------------------------------------------------------------------------------------------------------------------------------------
National Surety Corp. XSP2841660 4/1/99 Property $80,000,000 Excess of $20,000,000
Property $100,000,000 Total Property Coverage
------------------------------------------------------------------------------------------------------------------------------------
Travelers Ins. Co. M5JBMG270X2122 4/1/99 Boiler & Machinery $100,000,000
------------------------------------------------------------------------------------------------------------------------------------
National Union Fire Ins. Co. RMGL ▇▇▇-▇▇-▇▇ 4/1/99 General Liability $5,000,000
------------------------------------------------------------------------------------------------------------------------------------
AIU Ins. Co. BE ▇▇▇-▇▇-▇▇ 4/1/99 Umbrella $25,000,000
------------------------------------------------------------------------------------------------------------------------------------
National Union Fire Ins. Co. RMCA ▇▇▇-▇▇-▇▇ 4/1/99 Automobile $1,000,000 Combined Single Limit
------------------------------------------------------------------------------------------------------------------------------------
Commercial Life Ins. Co. GTA 15675 4/1/2000 Travel Accident $1,000,000 Class I Employees
$100,000 Class II Employees
------------------------------------------------------------------------------------------------------------------------------------
Chubb Ins. Group 8133-87-39-A 4/1/99 Crime $1,000,000
------------------------------------------------------------------------------------------------------------------------------------
National Union Fire Ins. Co. ▇▇▇-▇▇-▇▇ 4/1/99 Directors and Officers $5,000,000 (D&O)
------------------------------------------------------------------------------------------------------------------------------------
National Union Fire Ins. Co. ▇▇▇-▇▇-▇▇ 4/1/99 Pension Trust $1,000,000 (Pension Trust)
------------------------------------------------------------------------------------------------------------------------------------
Ins. Co. of State of RMWC ▇▇▇-▇▇-▇▇ 4/1/99 Workers Compensation N/A
Pennsylvania & Employers
Liability $1,000,000
------------------------------------------------------------------------------------------------------------------------------------
Insurance Company of North 498392-55 4/1/99 Ocean Cargo $5,000,000 (Vessel)
America $2,000,000 (Aircraft)
------------------------------------------------------------------------------------------------------------------------------------
-28-
96
------------------------------------------------------------------------------------------------------------------------------------
CARRIER POLICY# EXPIRATION DATE TYPE POLICY LIMITS
------------------------------------------------------------------------------------------------------------------------------------
Seuguros LA Territorial, S.A. QB1 19663 4/1/99 Multiline Policy $230,000 Property
Mexico $600,000 General Liability
$7,500 Theft
$2825 Per Occ Cash
$500,000 Auto (New Paso)
------------------------------------------------------------------------------------------------------------------------------------
Union Ins. Society of Hong 070/010254/01 12/1/98 Employers Liability $100,000,000 (HKS)
Kong, Ltd. Hong Kong
------------------------------------------------------------------------------------------------------------------------------------
Carolina Benefits 59502 5/1/98 Third Party Self-Funded
Administrators Administrator for
Medical Benefits
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ Life Ins. Co. LNL-9023 5/1/98 Stop Loss Reinsurance Medical Only - Individual Stop Loss -
$150,000
Maximum Amount per Covered Person:
$1,000,000
------------------------------------------------------------------------------------------------------------------------------------
Anthem Life Ins. Co. 39182 5/1/98 Group Team Life Ins. COMPANY PAID
Hourly & Non-Exempt Employees:
$20,000
Exempt: $75,000
Exempt Executive: $150,000
EMPLOYEE CONTRIBUTORY
Exempt: $75,000
Exempt Executive: $150,000
------------------------------------------------------------------------------------------------------------------------------------
Reliance Standard Life Ins. LSC-098393 5/1/98 Long Term Disability Exempt Employees Only
Monthly Benefit: $5,000
------------------------------------------------------------------------------------------------------------------------------------
-29-
97
SCHEDULE 5.9
LITIGATION
1. ▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ v. STEEL HEDDLE MFG. CO., United
States District Court for the Northern District of Georgia, Civil Action
Number: 3 96-CV-150-JTC.
2. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ asserts a claim against the Company and the majority
shareholders for breach of their fiduciary duty and misrepresentation
with respect to 2204 shares of options which were repurchased from
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ in the spring of 1997. It is alleged that the Company
and its majority shareholders restructured the Company so as to devalue
the options and solicited their repurchase without making proper
disclosure of their intentions and such omissions and misrepresentations
have caused ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ to lose gain on the sale of the 2204
options.
-30-
98
SCHEDULE 5.10
COMPLIANCE WITH LAWS
None.
-31-
99
SCHEDULE 5.11
TAX MATTERS
None.
-32-
100
SCHEDULE 5.12
EMPLOYEE BENEFIT PLANS
I. PAID HOLIDAYS - Employees receive ten (10) paid holidays each calendar
year as follows:
Good Friday
Memorial Day
Labor Day
Thanksgiving Day
Friday after Thanksgiving
Christmas Week - 5 paid holidays in week in which Christmas falls.
II. PAID VACATION - Vacation eligibility is based on length of service.
A. ALL EMPLOYEES EXCEPT SENIOR MANAGEMENT GROUP
One year service - two weeks vacation
Five years service - three weeks vacation
Fifteen years service - four weeks vacation
B. SENIOR MANAGEMENT GROUP
Vacation up to 5 weeks according to the following schedule or
Company vacation policy, whichever offers the greater advantage:
A. First year in Group - 3 weeks
B. Second year in Group - 4 weeks
C. Third year in Group - 5 weeks
A maximum of one week of unused vacation may be carried over to
the next vacation year; however, three weeks may be carried over
in the pre-retirement year.
III. GROUP INSURANCE
A. MEDICAL BENEFITS - Steel Heddle self insures benefits
through a leased agreement with the Blue Cross-Blue Shield
PPC Managed Care Network. Payment of claims is
administered by Carolina Benefit Administrators of S.C., a
third party administrator. The Schedule of Benefits is
listed in the enclosed Summary Plan Description.
Employee coverage is provided at no cost to employees.
Employees contribute $10.00 per week for one dependent or
$12.50 per week for two or more dependents. Employee
premiums are paid through a Section 125 Premium Plan.
B. LIFE INSURANCE - Company paid life insurance for employees
only as follows:
Hourly Paid and Weekly Salaried Non-exempt Employees: $20,000
Salaried Exempt Employees: 1 and 1/2 X Base Annual Salary
Maximum Benefit: $75,000
Management Group: 1 and 1/2 Base Annual Salary
-33-
101
Maximum Benefit: $150,000
Note: Salaried Exempt Employees are eligible for contributory
life insurance. Maximum Contributory is $75,000 or
$150,000
C. SHORT TERM DISABILITY BENEFITS - $90.00 Per week.
Company self-insures this benefit which covers only hourly
and weekly salaried non-exempt employees. Benefit can be
paid 26 weeks maximum.
D. LONG TERM DISABILITY BENEFIT - for Salaried Exempt
Employees. Company paid insured benefit of $5,000 per
month Maximum.
IV. EMPLOYEE THRIFT PLAN - 401(k)
Company match of employee contributions up to 6%: $.65 per $1.00
of employee contributions. Employees may contribute up to
additional 10% with no company match.
Employee directed investments in seven investment options.
Funds are managed by ▇. ▇▇▇▇ Price; applying currently for a
determination letter
V. CASH BALANCE PENSION PLAN - Company paid Benefit for all employees.
Eligibility: Age 21 with one year of service.
Steel Heddle makes annual contributions to each eligible
employee's account. Contribution is determined by Base Annual
Salary and Age of participant. All funds are invested as follows:
▇▇▇▇▇▇ Brothers Corporate/Government Bonds: 60%
S&P 500: 40%
VI. ANNUAL LENGTH OF SERVICE BONUS - Employees will receive $10.00 per year
for each year of service to a maximum of $250.00.
VII. YEAR-END BONUSES - Year-end bonuses are determined as a percentage of
salary.
VIII. MIDDLE MANAGEMENT PROFIT SHARING
A performance based profit sharing plan with incentive payments
to middle managers based on divisional and corporate earnings.
IX. EXECUTIVE PERFORMANCE BONUS AGREEMENT
Executive Performance Bonus Agreement dated as of January 5, 1998
with each of ▇▇▇▇▇▇▇▇ ▇. Team, ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, J.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇ and C. ▇▇▇▇▇ ▇▇▇▇▇. A performance-based bonus agreement
with incentive payments to executives. Based on consolidated
earnings.
X. TUITION REIMBURSEMENT
Steel Heddle offers its employees tuition reimbursement for
courses of study directly related to an employee's job or which
qualify the employee for another job within the company. All
courses must be pre-approved.
-34-
102
XI. SUPPLEMENTAL PENSION PLANS (Plans may not qualify for exemptions from
coverage under ERISA.)
A. Cash Drawer Plan. An agreement under which direct payments are
made to certain retired personnel based on years of service and
compensation.
Participants are guaranteed a benefit equal to 50% of average
base monthly salary for best five of last 10 years of service
reduced by: (1) monthly straight life benefit from company paid
pension plan, (2) monthly straight life benefit from company
contributions and earnings on company contributions to employee
thrift plan, (3) and 50% of primary social security benefit.
B. Trust Fund Plan. An Agreement under which employees whose
normal retirement benefit at age 65 from the Steel Heddle Master
Retirement Plan was less than $90.00 per month received direct
monthly payments supplementing the Retirement Plan benefit to
equal $90.00 per month. There are six retirees currently
receiving a benefit from this agreement.
XII. POST RETIREMENT HEALTH CARE BENEFITS FOR RETIREES BORN PRIOR TO JANUARY
1, 1935
For employees who retire before age 65, Company paid health care
coverage continues from date of retirement for a period of 18
months but not beyond the date retiree becomes age 65 or the date
retiree becomes eligible for MEDICARE benefits. These benefits
also apply to spouses of retirees. After 18 months, the retiree
can continue this coverage for himself and spouse by paying a
premium of $40.00 per month per person to the company. Health
care benefits on the retiree and on the spouse are discontinued
on each when the covered person is age 65 or becomes eligible for
MEDICARE.
REIMBURSEMENT OF PART B MEDICARE PREMIUM: The company reimburses
the retiree for his and his spouse's Part B Medicare Premium
capped at $50.00 per month per person. Payments are made annually
and are discontinued upon the death of the retiree.
RETIREES BORN AFTER JANUARY 1, 1935: Company paid health care
coverage is discontinued on date of retirement. The retiree may
continue the coverage under COBRA by paying the fully insured
premiums to the company for a period of time specified by COBRA.
The company does not reimburse these retirees for Part B Medicare
Premium.
POST RETIREMENT SUPPLEMENTARY MEDICARE PLAN
An agreement under which key named executive employees have
medical benefits supplementing MEDICARE benefits to the level of
benefits covered in the medical benefits plan for active
employees. MEDICARE is primary and pays first. Steel Heddle's
Plan is secondary. Retirees eligible for this benefit pay a
premium to Steel Heddle of $40.00 per month for the retiree and
$40.00 per month for spouses of retirees.
PHILADELPHIA EFFECTS AGREEMENT
An agreement made on March 9, 1983 between Steel Heddle Mfg. Co.
and the United Steel Workers of America (AFL-CIO) upon the
closing of the Philadelphia Plant. In this agreement, Steel
Heddle agreed to pay Philadelphia Plant employees and their
spouses $450 per year for life to assist the employees in
purchasing health insurance. The employee and the spouse each
receive separate payments.
XIII. POST RETIREMENT LIFE INSURANCE
Company paid life insurance is continued as follows:
A. Hourly Paid and Weekly Paid non-exempt Salaried Employees: $3,000
-35-
103
B. Semi-monthly Paid Salaried Exempt Employees: Company paid
coverage existing on date of retirement is reduced 10
percent per year for 5 years after which the retiree has
50 percent of pre-retirement company life insurance
continued in force for life.
XIV. PAYMENT FOR ABSENTEEISM DUE TO NON WORK-RELATED INJURY OR ILLNESS
A. Hourly Paid Employees
Hourly paid employees are not entitled to any payment of
wages by the Company for non work-related illnesses or
injuries.
B. Weekly Salaried Employees
Weekly salaried employees will receive their regular pay,
less the amount of any Weekly Indemnity Insurance to which
they may be entitled, for each extended period of illness,
the length of which will be determined by the
uninterrupted years of service with the Company. During
the first 12 months of employment, five consecutive work
days will constitute the maximum length of an extended
period of illness for which the Company will pay. For each
successive 12 months of employment an additional workday
will be added to the five consecutive work days referred
to above.
C. Semi-monthly Salaried Employees
Semi-monthly salaried employees will receive full pay when
absent from work for injury or illness provided a single
period of continuous absenteeism does not exceed twelve
weeks. Payment for more than on such period of absenteeism
per calendar year will necessitate review by Management on
a case-by-case basis.
XV. PENSION PLAN FOR EMPLOYEES OF STEEL HEDDLE (CANADA) LTEE/LTD. (Plan may
not qualify for exemptions from coverage under ERISA.)
Plan presently covering one employee in Canada to which
contributions are made by Employer to Imperial Life
Assurance Company of Canada.
-36-
104
SCHEDULE 5.14
ABSENCE OF UNDISCLOSED LIABILITIES
None.
-37-
105
SCHEDULE 5.15
LABOR
None.
-38-
106
SCHEDULE 7.3
OPERATION OF BUSINESS PRE-CLOSING
- Closing of operations of Steel Heddle (Tianjin) Weaving Machine
Accessories Co. Ltd.
- Payment of interest and dividends among Steel Heddle Companies.
-39-
107
SCHEDULE 7.12
KEY MANAGEMENT EMPLOYEES
Name Position
---- --------
▇▇▇▇▇▇▇▇ ▇. Team President and CEO
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Executive Vice President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President - Finance
J. ▇▇▇▇▇ ▇▇▇▇▇▇ General Sales Manager
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Vice President - Frame Division
▇▇▇▇ ▇. ▇▇▇▇▇▇ Manager - Heddle Division
▇▇▇▇▇ Bow Manager - ▇▇▇▇ Division
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Manager - Rolled Products Division
-40-
108
SCHEDULE 8.3
THIRD PARTY CONSENTS
1. Credit Agreement among SH Intermediate Corp., et al. and NationsBank,
N.A., as agent, dated February 20, 1997.
-41-